Subdued Session, Narrow Ranges, Awaiting US CPI Data

ACGBs (YM -1.0 & XM -1.0) are holding slightly cheaper after dealing in relatively narrow ranges in today’s Sydney session. There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Consumer and Business Confidence data.

• Cash US tsy yields are dealing little changed across benchmarks in today’s Asia-Pac session, with news flow light, ahead of US CPI data out later today.
• January’s US CPI report is forecast to show the first reading below 3% for annual inflation since March 2021, increasing optimism that the Federal Reserve will be able to start loosening monetary policy this year. See MNI US CPI Preview: Used Cars Drag Seen Clashing With Firmer Non-Housing Services (link)
• Cash ACGBs are 1bp cheaper, with the AU-US 10-year yield differential 1bp wider at -1bp.
• Swap rates are 1bp higher.
• The bills strip is slightly cheaper, with pricing +1 to -2.
• RBA-dated OIS pricing is 2bps firmer for meetings beyond September. A cumulative 36bps of easing is priced by year-end.
• Tomorrow, the local calendar is empty, apart from the AOFM’s planned A$800mn sale of the 1% December 2030 bond.