Local Data Vs. Geopolitics

ACGBs came under some light pressure into the bell after AP source reports suggested that the missile that hit Polish land on Tuesday (killing two Polish civilians) “was fired by Ukrainian forces at an incoming Russian one,” per preliminary assessments flagged by U.S. officials. This came after U.S. President Biden suggested that it was” unlikely” that the missile was fired from Russia, while the G7 failed to lay the blame for the events at the feet of Russia. This left YM +4.0 & XM +3.5 at the close. Wider cash ACGBs print 3.5bp richer to 2.0bp cheaper, twist steepening with a pivot around 15s.

• Some light narrowing in EFPs provided modest support for ACGBs.
• Marginally firmer than expected Q3 WPI data was largely in line with the picture painted in the survey measures that have helped to guide monetary policy in recent months, so the readings don’t really represent much in the way of game changing information for the RBA at this juncture. This comes after the Bank slowed its pace of tightening to 25bp hikes over its last couple of meetings. Some post-data vol. ensued, before a bid came back in, aided by some firming in U.S. Tsys at the time.
• Bills were 1-11bp richer through the reds, bull flattening, generally following bonds, while RBA dated OIS was little changed on the day.
• Looking ahead, the monthly labour market report headlines the domestic docket on Thursday.