Slightly Weaker Despite Slight Miss For CPI Monthly

ACGBs (YM +2.0 & XM +0.5) are ~2bps weaker after November’s CPI monthly printed 4.3% y/y, slightly undershooting market expectations of 4.4%.

• From the ABS: The most significant contributors to the November annual increase were Housing (+6.6 per cent), Food and non-alcoholic beverages (+4.6 per cent), Insurance and financial services (+8.8 per cent) and Alcohol and tobacco (+6.4 per cent).
• “CPI inflation is often impacted by items with volatile price changes like Automotive fuel, Fruit and vegetables, and Holiday travel. When excluding these volatile items from the monthly CPI indicator, the annual rise in November was 4.8 per cent, lower than the annual rise of 5.1 per cent in October,” Ms Marquardt said.
• Cash ACGBs are 2-4bps richer on the day, with the AU-US 10-year yield differential 2bps tighter at +7bps.
• Swap rates are 1-2bps lower.
• The bills strip has bull-flattened, with pricing flat to +4.
• RBA-dated OIS pricing is slightly firmer after the data but remains 1-4bps softer for meetings beyond May on the day. A cumulative easing of 53bps is priced by year-end.