Richer After CPI Monthly Data, Retail Sales Tomorrow

ACGBs (YM +2.0 & XM +2.0) sit slightly richer on the day but 4-5bps stronger than pre-CPI levels.

• February CPI was steady at 3.4% y/y, slightly lower than Bloomberg consensus. Seasonally adjusted it rose 0.5% m/m, with the annual rate rising to 3.7% from 3.5%.
• Inflation continues to be contained by goods and tradeables prices. However, domestically driven inflation remains sticky as services in February rose to 4.2% y/y from 3.7% and non-tradeables to 4.8% from 4.7%. This area remains a particular focus for the RBA.
• The mixed messages from the February data confirm the importance of the quarterly CPI due on April 24.
• (AFR) Trimmed mean inflation, the RBA’s preferred measure for price changes, rose slightly from 3.8% to 3.9%. (See link)
• Cash ACGBs are 2bps richer, with the AU-US 10-year yield differential 4bps lower at -21bps.
• Swap rates are 1bp lower.
• The bills strip is slightly cheaper, with pricing -1 to -2.
• RBA-dated OIS pricing is little changed on the day across meetings. A cumulative 40bps of easing is still priced by year-end.
• Tomorrow, the local calendar sees Retail Sales, Consumer Inflation Expectations, Private Sector Credit and Job Vacancies data.