Slightly Cheaper, Markets Await US CPI Data

ACGBs (YM -1.0 & XM -2.0) are slightly cheaper after US tsys trade mildly weaker after the NY bell, with the curve steeper (2/10 +2bps at -33bps). The US tsy 10-year closed 2bps higher at 4.03%, sustaining the recent trend of closures above the 4% mark. The $37bn 10-year auction was awarded at the lowest yield since August with a small tail.

• NY Fed President John Williams said he expects the central bank to keep a restrictive stance for some time and to begin rate cuts only when confident inflation is moving toward 2% on a sustained basis, also noting a slowing of QT does not seem to be close.
• Markets await US CPI/PPI on Thursday/Friday. The realisation of still relatively sticky core CPI inflation could help continue a trimming of Fed rate cut expectations compared to those extremes seen late last year, despite that move pausing in the past few sessions.
• Meanwhile, the SEC approved Bitcoin ETF proposals on an accelerated basis.
• Cash ACGBs are flat to 2bps cheaper, with the AU-US 10-year yield differential 1bp wider at +11bps.
• Swap rates are flat to 2bps higher, with the 3s10s curve steeper.
• The bills strip is little changed.
• RBA-dated OIS pricing is slightly softer across meetings.
• Today, the local calendar sees Trade Balance data for November.