Slightly Richer, Post-CPI Rally Unwound, Retail Sales Tomorrow

ACGBs (YM +2.0 & XM +2.0) sit in the middle of the Sydney session range. While the CPI Monthly for August printed in line with expectations at 5.2% y/y, the domestic market managed to firm 2bps in the aftermath. That move was assisted by a strengthening in US tsys in early Asia-Pac trade. At the time of writing, the post-CPI strength in ACGBs has been unwound, despite US tsys holding 1-3bps richer across the major benchmarks.

• (AFR) Inflation has accelerated for the first time in four months, as expensive fuel and cost pressures in labour-intensive services pushed up annual consumer prices by 5.2 per cent to keep alive the chance of another interest rate rise. (See link)
• Cash ACGBs are 2bps richer on the day, with the AU-US 10-year yield differential at -14bps.
• Swap rates are 2-3bps lower on the day.
• The bills strip is richer, with pricing flat to +2.
• RBA-dated OIS pricing is flat to 3bp softer across meetings.
• Tomorrow the local calendar sees Job Vacancies (Q3) and Retail Sales (Aug).