Slightly Richer, Subdued Start To The Week For Global Bonds, Q1 CPI Tomorrow

ACGBs (YM +3.0 & XM +3.5) are slightly richer after a subdued start to the week for US tsys. US tsys finished 1-2bps richer, ahead of a heavy week of Treasury supply with $183b of debt due to be auctioned.

• Risk appetite was higher as Middle East tensions settled. US equities bounced ahead of this week's heavy slate of earnings announcements, including four of the Magnificent 7.
• Judo Bank and S&P Global released April's flash PMIs: Mfg rose to 49.9 from 47.3 in March; Services fell to 54.2 from 54.4 in March; and Composite rose to 53.6 from 53.3 in March.
• Cash ACGBs are 3-4bps richer, with the AU-US 10-year yield differential at -33bps, its cycle low.
• Swap rates are 3-4bps lower.
• The bills strip has slightly bull-flattened, with pricing flat to +2.
• RBA-dated OIS pricing is slightly softer for 2025 meetings. A cumulative 19bps of easing is priced by year-end.
• Q1 CPI data is due to be released tomorrow.
• There is a high correlation between Australian and NZ annual CPI inflation across the major components. NZ Q1 CPI showed headline inflation moving closer to the top of the band in line with expectations at 4.0% y/y. (See MNI link)