Slightly Richer Ahead Of CPI Monthly Data

ACGBs (YM +2.0 & XM +1.0) are slightly richer following a modest rally by US tsys. US tsys finished the NY session with yields 1-2bps lower across benchmarks ahead of CPI/PPI data on Thursday/Friday.

• A better-than-feared 3-year auction provided support late in the session. The US tsy 10-year finished 2bps lower at 4.01%. Nevertheless, it was the third straight close above 4%.
• Cross asset roundup: WTI Crude Oil was up 2.0%, Gold up 0.1% and S&P E-Mini Futures down 0.2%.
• Cash ACGBs are 1bp richer, with the AU-US 10-year yield differential 1bp tighter at +8bps.
• Swap rates are 2-3bps lower.
• Bills pricing is flat to +3.
• RBA-dated OIS pricing is 1-4bps softer for meetings beyond May. A cumulative easing of 51bps is priced by year-end.
• Today, the local calendar sees November CPI Monthly, with the market expecting 4.4% y/y versus 4.9% prior. Quarterly Job Vacancies are also due.
• The AFR reports that UBS is forecasting “a lift of 0.6% m/m, but this still sees a further moderation to 4.6% y/y. Still, UBS said business surveys suggest the overall impulse of inflation is likely moderating towards a more normal trend. As for rates, UBS still expects the RBA to hold, until cuts commence in November.