Notably Firmer, With A Lack Of Meaningful Headline Observed

ACGBs firmed in Sydney dealing, adding to the bid derived from Tsys & EGBs on Wednesday.

• The initial bid came via a bull flattening motion, before the front end played catch up, leaving the major cash ACGB benchmarks 12-13bp richer across the curve, while YM was +13.0 & XM was +12.5 at the close.
• Note that 10-Year ACGBs have now reversed the notable cheapening witnessed since the start of trade on 20 Dec.
• There wasn’t a particular headline catalyst that promoted the two-step move seen in the Sydney session. Asofter than expected round of PPI data out of China was identified by some, but we aren’t necessarily in line with that train of thought, given the nature/timing of the two notable legs observed.
• The market appeared a little skittish ahead of the U.S. CPI release that will cross in NY hours.
• Bills were 5-14bp richer through the reds, bull flattening.
• Local news flow was limited, with a wider than expected monthly trade surplus flattering less than inspiring internals.
• Meanwhile, RBA dated OIS continues to price 20bp of tightening for the Feb ’23 meeting, while terminal cash rate pricing came in to just above 3.75%, in sympathy with moves in ECB pricing on Wednesday and the general bid core global FI (excluding JGBs).
• Looking ahead, housing finance data headlines the domestic docket on Friday, although adjustments to U.S. CPI will dominate any impulse from that data.