Flatter On U.S. Lead, RBA's Harper Plays Down Asset Bubble Fears

The curve is flatter vs. settlement levels in early Sydney trade, YM -0.5 and XM +3.0, with the latter having a look through its overnight highs already. Swaps have lagged cash ACGBs on the move, leading to some spread widening there.

• The overnight flattening came on the back of softer than expected U.S. CPI data and reassuring tones from Fed Chair Powell re: the longevity and need for monetary stimulus.
• Locally, a BBG interview with RBA board member Harper saw focus full on the remaining excess capacity in the Australian economy, while he played down the risk of asset bubbles. On QE, Harper noted that the pace of the economic recovery, in both local and global terms, in addition to actions by other central banks are the main factors that will determine whether the Bank's bond buying scheme is extended again.
• The latest round of ACGB purchases from the RBA headlines the local docket on Thursday, while the Lunar New Year holidays, in addition to a national holiday in Japan are set to thin liquidity in Asia-Pac hours.