Limited By Impending Event Risk

Futures coiled through Sydney trade, with participants lacking anything in the way of meaningful conviction.

• Across the Tasman, the latest RBNZ decision saw the Bank deliver the widely expected 50bp rate hike (see earlier bullets for more details/colour on the matter), although there wasn’t anything much in the way of surprises when it came to the tone of the accompanying statement, leaving participants with little to trade off as we work towards the U.S. CPI print. YM deals +1.5, with XM +3.5 at typing. A similar degree of bull flattening has been observed on the wider cash ACGB curve, with the 7- to 12-Year zone providing the firmest point on the curve. EFPs have narrowed for a second day. The IR strip runs 1-6bp firmer through the reds, bull steepening.
• The latest ACGB Nov-32 auction was digested smoothly, with the weighted average yield pricing 0.73bp through prevailing mids, while the cover ratio topped the 2.50x mark, just. As we noted in our preview, prevailing market conditions meant that a solid auction was likely, although the cover ratio was likely limited by the proximity to the impending U.S. CPI print (and perhaps even the RBNZ decision), in addition to a continued lack of meaningful foreign demand.
• Looking ahead, the aforementioned U.S. CPI release provides the immediate headline risk event, while Thursday will see the release of the monthly Australian labour market report.