T-Notes Round Trip, Cash Curve Continues To Bull Flatten

T-Notes round tripped from a session high of 110-24 as headwinds for U.S. tech shares lent support to core FI, while spillover from Australia's expectation-beating CPI data kept a lid on gains.

• NASDAQ 100 e-minis led U.S. equity-index futures lower on the back of post-market slumps in Alphabet and Microsoft. Google's parent company reported weaker-than-expected revenue, while Windows provided an underwhelming revenue forecast. Still, Asia-Pac equity benchmarks were broadly firmer, with stabilisation in Chinese indices aiding sentiment.
• The release of Australia's Q3 CPI figures reverberated across markets, sealing the case for a 25bp cash rate target next week, which is now fully priced by the swaps market.
• The market still sees the FOMC raising the fed funds rate by 75bp next month, pricing is little changed on the day.
• T-Notes last deals +0-01 at 110-19, with eurodollar future running +0.5 to -1.0 tick through the reds. Cash Tsy curve bull flattened, building on overnight impetus generated by weaker than expected U.S. house price & consumer confidence data. Yields last sit 0.6-4.0bp lower across the curve.
• U.S. 5-Year/30-Year spread returned to inversion territory, last sitting at -2.91bp; 2-Year premium over 10-Year debt has tightened at the margin.
• Local data highlights include wholesale inventories and new home sales, with 5-Year Tsy auction also coming up.