Light Cheapening Observed

Aussie bonds have cheapened a touch in the last hour or so but are now recovering from session cheaps. When it comes to a potential catalyst we would point to digestion of the previously alluded to piece from WSJ RBA watcher Glynn, which noted that “there was enough nastiness in Australia’s recent fourth-quarter inflation report to lock in the prospect of several interest-rate increases over the coming months, with the data confirming that the country continues to lag well behind other major economies in the race to tame prices.” YM last deals -1.0, while XM is also -1.0. Wider cash ACGBs run 1-2bp cheaper across the curve, with some light bear flattening observed. 10-Year EFPs have narrowed a little on the move, suggesting it is bond-, not swap-, driven. RBA terminal cash rate pricing hovers back around the 3.75% mark, operating in a tight range today, initially pressured by NZ labour market data before edging higher, likely on the Glynn article.