Give Back Part Of The Post-CPI Richening

ACGBs are cheaper (YM -4.0 & XM -3.5) paring part of yesterday’s post-CPI strength. US Tsys were modestly weaker in NY trade with the 10-year yield 5bp higher, unwinding some of the near 20bp decline in yields seen in the first two trading days of the week. First Republic Bank remained in the headlines as it battles to stay alive. The KBW banking index was down another 1% after yesterday’s 3.6% decline.

• The market interpreted yesterday's CPI data as a sign that inflation has peaked, reducing the likelihood of the RBA resuming its tightening cycle at the May meeting. This assessment was aided by trimmed mean CPI printing below consensus estimates. However, persistent domestically driven inflation, which indicates excess demand in the economy, has some analysts still expecting further tightening by the RBA down the line.
• Cash ACGBs are 4bp cheaper with the AU-US 10-year yield differential -1bp at -11bp.
• Swap rates opened 3-4bp higher.
• Bills strip is steeper with pricing -4 to -6.
• RBA dated OIS opens with pricing 1-3bp firmer across meetings.
• Export and Import Prices are slated for release today with the former impacted by lower commodity prices and the latter likely to reflect global goods disinflation and lower energy prices.