Narrow Ranges Ahead OF CPI Monthly Data Tomorrow

ACGBs (YM -1.0 & XM -3.5) are sitting cheaper and in the middle of today’s relatively narrow ranges. Without domestic data to drive the market, local participants have been content to keep their powder dry ahead of January CPI data tomorrow and Retail Sales on Thursday.

• January CPI is expected to increase moderately to 3.6% y/y from 3.4% in December with forecasts between 3.4% and 4%. As it is the first month of the quarter it will contain limited updated information on services and will mainly cover goods prices.
• On Thursday retail sales for January print and are expected to rise 1.6% m/m after falling 2.7%. The series has been volatile due to changes in the timing of seasonal discounts.
• US tsy dealings during today’s Asia-Pac session have also failed to provide any directional guidance. Cash US tsys are little changed across benchmarks.
• Cash ACGBs are 1-4bps cheaper with the AU-US 10-year yield differential 1bp lower at -14bps.
• Swap rates are 1-3bps higher, with the 3s10s curve steeper.
• The bills strip has bear-flattened, with pricing -1 to -3.
• RBA-dated OIS pricing is flat to 2bps firmer for meetings beyond June leading.
• The AOFM plans to sell A$800mn of the 3.75% 21 May 2034 bond on Friday rather than its usual issuance tomorrow.