Richer But Off Best Levels, CPI & Retail Sales Data Later In The Week

ACGBs (YM +5.0 & XM +9.0) are higher but off Sydney session highs. ACGBs opened stronger today following on from US tsys’ bull-flattening on Friday. Without domestic catalysts, the local market has extended those gains in sympathy with US tsy dealings in today’s Asia-Pac session. Cash US tsys are ~2bps richer across benchmarks.

• Cash ACGBs are 6-9bps richer, with the AU-US 10-year yield differential at -13bps.
• Swap rates are 4-7bps lower, with the 3s10s curve flatter.
• The bills strip has bull-flattened, with pricing flat to +6.
• RBA-dated OIS pricing is flat to 4bps softer across meetings. A cumulative 37bps of easing is priced by year-end.
• The local calendar is empty tomorrow, with January CPI (Wed) and Retail Sales (Thu) as the week's highlights.
• 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.
• Retail Sales for January is 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 and forecasts for January range from +0.3% to +2.5%.