Slightly Weaker, US Tsys Cheapen After PPI Data

ACGBs (YM -1.0 & XM -0.5) are slightly weaker after US tsys cheapened on Friday following higher-than-expected PPI data. Headline final demand PPI printed at its highest SA monthly rate since August '23 in January. The core metrics overshot consensus by a larger margin. PPI ex-food and energy at 0.50% m/m (vs 0.1% cons, -0.06% prior) brings the 3mma annualized rate to 2.42% (vs 0.56% prior).

• US tsy yields reached the highest level for this year, with the 2-year yield spiking to 4.72% on the data before finishing 7bps higher at 4.64%. The 10-year yield was up 5bps to 4.28% after reaching an intraday peak of 4.33%.
• Meanwhile, the UofM Consumer Sentiment Index reached its highest level since mid-2021. Sentiment has been underpinned by rising equity markets and falling inflation.
• A slow start to the week is expected with the Presidents Day holiday on Monday (rates open for shortened hours on Globex).
• Cash ACGBs are 1bp cheaper, with the AU-US 10-year yield differential 1bp lower at -8bps.
• Swap rates are 1bp higher.
• The bills strip is flat to -3, with late whites the weakest.
• RBA-dated OIS pricing is slightly firmer for meetings beyond August. A cumulative 34bps of easing is priced by year-end.
• Today, the local calendar is empty.