Little Changed, RBA Bullock Still Walking The Narrow Path, Business Confidence Drops

In futures roll-impacted trading, ACGBs (YM +0.4 & XM flat) are little changed after dealing in relatively tight ranges in today’s Sydney session.

• RBA Governor Bullock spoke at the AusPayNet Summit earlier today. She discussed payments. That said, she was asked a question on monetary policy and said that Australia is not falling behind the rest of the world in the inflation fight and the RBA still believes that it can slow the economy enough to return inflation to target while preserving most of the employment gains. The RBA will continue to watch the data – emphasising its data dependency. Thus, the January 31 Q4 CPI data is key to the February decision.
• Elsewhere, Westpac’s consumer sentiment for December rose 2.7% to 82.1, the highest level since April, in a month where the RBA left rates unchanged.
• Business confidence plunged to a non-Covid 11-year low. Business conditions also softened, along with the trading and profitability sub-indices.
• Cash ACGBs are flat to 1bp richer, with the AU-US 10-year yield differential 2bps wider at +10bps.
• Swap rates are 1bp lower, with EFPs unchanged.
• The bills strip is slightly cheaper, with pricing flat to -2.
• RBA-dated OIS pricing is little changed.