Richer Ahead Of May’s CPI Monthly Release Tomorrow

ACGBs (YM +2.0 & XM +2.0) are richer and at Sydney session highs ahead of tomorrow’s CPI Monthly release. Dealings were, however, relatively subdued with cash US tsys little changed in today’s Asia-Pac session.

• Outside of the previously outlined Westpac's consumer sentiment, there hasn't been much in the way of domestic drivers to flag.
• Cash ACGBs are 1-2bps richer, with the AU-US 10-year yield differential at -3bps.
• Swap rates are 1bp lower.
• The bills strip is slightly richer, with pricing flat to +2.
• RBA-dated OIS pricing is flat to 2bps softer across meetings. A cumulative 16bps of easing is priced by year-end from an expected terminal rate of 3.37%.
• Tomorrow, the local calendar will see May’s CPI Monthly, with consensus expecting 3.8% y/y up from 3.6% the previous month. Forecasts range from 3.5% to 4.0% with most around 3.7-3.8%. Housing costs, insurance, electricity prices and personal services are likely to rise.
• RBA Assistant Governor Kent will speak tomorrow at 0935 AEST and Deputy Governor Hauser on Thursday at 2000 AEST.
• Tomorrow, the AOFM plans to sell A$600mn of the 3.50% 21 December 2034 bond.