Richer But Well Off Session’s Best Levels, CPI Monthly Due Tomorrow

ACGBs (YM +6.0 & XM +6.0) sit richer but well off the Sydney session’s best levels. The move away from the session’s best levels likely reflected both domestic and offshore influences.

• On the domestic front, RBA Governor Bullock participated in a panel at the HKMA-BIS conference today. She reiterated her view that stronger-than-expected demand and inflation may mean further tightening. She also said that the main challenge for the RBA going forward will be to reduce domestic inflationary pressures.
• There was also likely spillover from a poor 40-year JGB auction. The actual high yield surpassed dealer expectations and the cover ratio declined to the lowest level at a 40-year auction since March 2022. The 40-year JGB is around 3bp cheaper in post-auction dealings.
• Cash ACGBs are 6bps richer, with the AU-US 10-year yield differential 4bps wider at +10bps.
• Swap rates are 6-7bps lower, with EFPs little changed.
• The bills strip has twist-flattened, with pricing -1 to +6.
• RBA-dated OIS pricing is flat to 5bps softer on the day across meetings, with Feb’25 leading.
• Tomorrow, the local calendar sees the CPI Monthly for October along with Q3 Construction Work Done and the Private Capital Expenditure Survey for 2023-24.
• Tomorrow, the AOFM plans to sell A$800mn of the 2.75% 21 June 2035 bond.