Off Lows As RBA Sees Underlying Inflation Back To Top Of Target In ‘24

Aussie bonds pull away from session cheaps, assumingly on the back of the RBA’s SoMP pointing to underlying inflation returning to the upper end of the target band by the end of next year (albeit with a mark higher in this year’s forecast points). There wasn’t anything in the way of meaningful moves in the growth/unemployment tracks, leaving inflation front and centre given the very tight domestic labour market situation (a bit of a given before the release). YM now -10.0., while XM is -7.0, as the contracts move away from their post-SoMP extremes, with the mark higher in this year’s underlying inflation expectations tempering the initial post-release bid. Wider cash ACGBs run 6.5-10.0bp cheaper as the curve flattening dynamic holds. RBA-dated OIS now shows a terminal rate of just under 4.15% after pushing closer to 4.20% earlier in the session. EFPs are little changed on the day.