Firmer Post-WPI

WPI provides a 0.1ppt headline miss vs. wider exp., which allows the Aussie bond space to unwind the early Sydney weakness, with YM & XM now -5.0 on the day at typing. Note that the 2.3% Y/Y headline reading was virtually in line with the RBA’s baseline exp. of 2.25%, and some way shy of the “3 point something” that the Bank has pointed to when it comes to generating sustainable underlying inflation in the upper end of its 2-3% target band. The lack of upside surprise may add more weight to RBA Governor Lowe’s desire to see a “couple more” quarterly CPI readings before potentially embarking on a tightening cycle, with the space bid as a result.