Most Of Early Weakness Pared

Aussie bond futures ticked away from their respective overnight bases as participants digested the latest NAB business survey, leaving YM -1.0 & XM -1.5, essentially unwinding their modest overnight losses, while cash ACGBs were 0.5 to 1.0bp cheaper across the curve.

• EFPs were essentially flat on the day.
• When it comes to the details, the NAB business confidence reading saw a modest uptick, alongside a downtick in the conditions print. The survey points to slower activity at solid levels and continued tight capacity, but with softening labour demand and price pressures, welcome developments for the RBA on net. However, NAB also noted that the fading of the post-COVID demand bounce and higher rates are impacting business. The risks to growth and potential feed through into the RBA terminal cash rate discussion allowed futures to tick higher in Sydney hours.
• RBA dated OIS was little changed on the day, showing 18bp of tightening for next month’s meeting and a terminal cash rate of 3.55-3.60%.
• Looking ahead, Q4 CPI data headlines the local docket on Wednesday. The BBG survey median looks for the headline CPI print to hit +7.6% Y/Y vs. the 7.3% seen in Q3, while the trimmed mean measure is seen at +6.5% Y/Y vs. the 6.1% observed in Q3.
• This will be further supplemented by the latest Westpac leading index print.