Richer With US Tsys Ahead Of Retail Sales & Capex Data

ACGBs (YM +4.0 & XM +4.0) are richer after US tsys managed to post one of the few positive sessions for February. With tsy supply out of the way and record corporate issuance abating, US tsys finished with a bull-steepening (yields 2-5bps lower) ahead of key PCE Deflator data later today.

• Consensus for the core PCE print sits at 0.4% m/m and the below unrounded analyst estimates average very close to that at 0.39. Supercore PCE could come in even stronger, with two eyeing a 0.55% increase.
• US tsys were supported following a flurry of balanced Fedspeak. While Atlanta Fed President Bostic remains "comfortable" with a patient Fed strategy to address inflation, he still expects the first rate cut this summer.
• More cautiously, NY Fed President Williams reiterated the Fed has a "ways to go to sustained 2% inflation", while Boston Fed President Collins wants greater confidence in disinflation before softening policy.
• Cash ACGBs are 4-5bps richer, with the AU-US 10-year yield differential unchanged at -14bps.
• Swap rates are 4-5bps lower.
• The bills strip has bull-flattened, with pricing flat to +4.
• RBA-dated OIS pricing is flat to 3bps softer across meetings. A cumulative 38bps of easing is priced by year-end.
• Today, the local calendar sees Retail Sales and Private Sector Credit for January and Private Capital Expenditure for Q4.