Lower, WPI Data Eyed

A lack of hardline sanctions on Russia from western powers has facilitated a move lower in Aussie bond futures vs. Tuesday’s settlement, with YM -8.5 and XM -7.5 in early Sydney trade. News that this week’s Blinken-Lavrov summit re: Ukraine is cancelled hasn’t impacted the space.

• Looking to today’s local docket, Q4 wage price data presents the most notable point of interest. The RBA continues to point to limited wage growth and has signalled its willingness to run the economy hot to foster lower unemployment in the hope that wage growth accelerates. The RBA Governor has also signalled a desire to see a couple more CPI readings before potentially embarking on a tightening cycle. Note that the RBA’s February SoMP pointed to wage growth of 2.25% Y/Y in Q4, while the BBG survey median looks for 2.4% (the RBA has flagged the need to look to a wider suite of worker compensation measures, owing to the tightness observed in the labour market). Q4 completed construction work data is also due. Meanwhile, on the issuance front, the AOFM will come to market with A$1.0bn of ACGB May-32.