The Aussie 3-Year rallied to monthly...>

AUSSIE BONDS: The Aussie 3-Year rallied to monthly highs and took a 10 tick bid

following the release of CPI figures which came in lower than expected but

higher than prior, the 10-Year took a 7 tick bid post data. The 3-Year contract

was last at 97.910 and the 10-Year last at 97.205. Sources reported the "Aussie

3-Year 90's was lifted nearly 16k times. Goes 90 Bid on 10k." Steepening on the

yield curve further on the session, 3-/10-Year spread at 3.2bp.

- ANZ on CPI: "The Q3 inflation print was a touch weaker than expected, although

the boost from higher electricity and gas prices came through as we thought. The

core measures, together with the ANZ Diffusion Index, suggest that price

pressures remain muted across a broad range of items. Retail competition and the

stronger AUD clearly impacted. From a policy perspective, our expectation of two

rate hikes in 2018 was not driven by an expected acceleration in inflation,

although a stabilisation in inflation close to the policy band seems a necessary

precondition. These data leave a question-mark about whether that has been

achieved, though we are leaving our RBA call unchanged at this point. Given

other dynamics, faster wage growth is critical to the inflation outlook."