Light Bear Steepening, Futures Off Overnight Lows

Aussie bond futures have edged away from their respective overnight bases during the early rounds of Sydney dealing, aided by a similar late NY move in U.S. Tsys, leaving YM -1.0 & XM -3.0. This comes after spill over from weakness in core global FI markets applied pressure in post-Sydney trade, aided by firmer than expected, albeit muddied by methodology tweaks, Spanish CPI data.

• Wider cash ACGB trade sees 1.5-3.0bp of cheapening, with bear steepening apparent on the curve and a parallel shift observed in the 7+-Year zone.
• Bills sit flat to -4 through the reds, also steepening, while RBA dated OIS continues to near enough fully price a 25bp hike for next week (24bpof tightening is priced) alongside a terminal cash rate of ~3.80%.
• While the ANZ-Roy Morgan weekly consumer confidence index can be subject to a lot of noise owing to its high frequency nature, one notable takeaway from the latest survey came as the collator noted that “household inflation expectations dropped 0.6pts despite the news last week that annual inflation hit a 32-year high in Q4 2022. This is a signal that household inflation expectations remain somewhat anchored despite accelerating inflation through 2022.”
• Looking ahead, retail sales and private sector credit data provide the domestic highlights on Tuesday, while Chinese official PMI readings provide the wider macro focal point for the Asia-Pac region.