Heavy Session, Narrow Ranges, Retail Sales Next Tuesday

ACGBs (YM -10.0 & XM -9.0) are holding cheaper after dealing in narrow ranges during the Sydney session. There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Q1 PPI data.

• Cash US tsys ~1bp richer in today’s Asia-Pac session after yesterday’s post-GDP cheapening. Today’s US data calendar shows Personal Income/Spending and UofM Sentiment.
• Cash ACGBs are 12-13bps cheaper, with the AU-US 10-year yield differential 6bps higher than Wednesday's close at -16bps.
• Swap rates are 13-14bps higher.
• The bills strip has bear-steepened, with pricing -4 to -12.
• RBA-dated OIS pricing is 6-15bps firmer than Wednesday’s closing levels for meetings beyond June. A cumulative 4bps of easing is priced by year-end as the December meeting shunts 28bps firmer versus pre-CPI levels.
• (AFR Joye) This week we were presented with yet more powerful data demonstrating that central banks are repeating past mistakes by actively encouraging an acceleration in consumer price pressures through their dovish prognostications. Australia’s central bank could be forced to fall into line with peers and raise rates again. (See link)
• Next week, the local calendar is empty on Monday ahead of Retail Sales and Private Sector Credit data on Tuesday.
• On Wednesday, the AOFM plans to sell A$800mn of the 3.75% May-34 bond.