Slightly Richer Ahead Of Today’s Q4 CPI Data

ACGBs (YM +1.0 & XM +2.5) are slightly richer ahead of today’s Q4 CPI print. This comes despite a material long-end-led rally in US tsys overnight. US tsys finished Tuesday’s NY session with a twist-flattening of the curve, pivoting at the 5s. Yields were 2bps higher to 6bps lower. Higher than expected JOLTS Job Openings pressured short-end US tsys early. Long-end US tsys have outperformed since the US Tsy announced a cut in its borrowing estimate from $816B to $760B late Monday. The focus is now on tomorrow's refunding announcement.

• Cash ACGBs are 1-3bps richer, with the AU-US 10-year yield differential 1bp tighter at +8bps.
• Swap rates are 1-2bps lower.
• The bills strip is little changed.
• RBA-dated OIS pricing is slightly softer across meetings. A cumulative 44bps of easing is priced by year-end.
• Today, the local calendar sees Q4 CPI print. This will be a crucial input into next week's RBA meeting deliberations. Bloomberg consensus expects headline CPI to print +0.8% q/q and 4.3% y/y versus +1.2% and 5.4% prior. Trimmed Mean CPI is expected to show +0.9% q/q and 4.3% y/y versus +1.2% and 5.2% prior.
• The AOFM plans to sell A$800mn of 3.75% 21 May 2034 bond on Friday, instead of its usual Wednesday window.