Front End Leads Post-CPI Bid

Aussie bonds spike higher on the back of softer than expected monthly CPI data, with YM through overnight highs. Cash ACGBs run 1-6bp richer across the curve, with the front end leading the bid as the curve bull steepens in the wake of the data.

• When it comes to the actual readings, the Y/Y headline CPI print slowed to +6.9% Y/Y vs. Sep’s +7.3% & a BBG survey median of +7.6%. Meanwhile, the trimmed mean CPI reading came in at +5.3% Y/Y vs. the prior +5.4% & BBG survey median +5.7%.
• The ABS noted that “in October, the most significant contributors to the annual rise were new dwellings (+20.4%), automotive fuel (+11.8%) and fruit and vegetables (+9.4%).”
• Conversely, “food and non-alcoholic beverage prices eased from an annual rise of 9.6% in September to 8.9% in October. Holiday travel and accommodation prices moderated from an annual rise of 12.6% in September to 3.7% in October.”
• Bills firmed and now sit 3-8bp richer through the reds. Dec ’22 RBA OIS pricing is little changed vs. pre-release levels, after a very modest downtick, with ~20bp of tightening priced for that event. Terminal cash rate pricing has eased a couple of bp on the RBA dated OIS strip, now printing just below 3.80%.