J.P.Morgan Recommend Going Long IRU2

J.P.Morgan note that "the recent upside surprise in core inflation alongside the RBA's objective of delivering sustained wage growth has seen the focus shift to next week's Q3 wage price index. We expect wage growth to remain soft and print at 0.4% Q/Q, owing to the combination of 1) lockdown-related headwinds in NSW/VIC and 2) the Fair Work Commission's (FWC's) decision to stagger the implementation of Award/minimum wage increases in H221, which we anticipate will be punitive from a seasonal adjustment perspective. If delivered, this would give substantial near-term support for Governor Lowe's conjecture that inflation dynamics in Australia are much more benign than elsewhere. In our view, this creates a tactical opportunity in the front end, particularly after a further sell-off following U.S. CPI. With nearly 100bp of hikes priced by the end of 2022, we enter a tactical long in AUD Sep '22 3-month bank bill futures (long IRU2 at 99.17)."