Stagflation Worry Drives Futures Flatter

The previously outlined stagflation worry and twist flattening dynamic observed on the U.S. Tsy curve spilled over into Aussie bond futures trade in the post-Sydney session, with YM failing to challenge its early overnight highs during the rebound observed in the second half of overnight trade, while XM moved to fresh session peaks during late NY hours (This came after a shunt lower on firmer than expected U.S. CPI data).

• YM has firmed a touch at the re-open, to last deal -0.5 on the day, while XM is in line with late overnight levels, last dealing +5.5.
• Bills run 1-3 ticks lower through the reds, led by the front end, with the strip comfortably back from post-U.S. CPI overnight lows.
• Thursday’s local docket is headlined by consumer inflation expectations data.