Treading Water Ahead Of Monthly CPI & GDP Data

ACGBs hold morning weakness (YM -4.0 & XM -4.5) fuelled by the mixed NY close for cash U.S. Tsys and modeslty cheaper Tsys in early Asian trading. Cash ACGBs are 4-5bp weaker. Swaps, mirroring bonds, remain 4-5bp weaker going into the local data drop with the curve flat. Bills are 4-5bp cheaper, with RBA dated OIS holding 1-2bp firmer pricing for meetings beyond May. Terminal rate pricing is at 4.33% with March meeting pricing remaining at a 95% chance of a 25bp hike.

• After looking through yesterday’s upside data surprises to the softening underlying trends in retail sales and private sector credit growth, the market will have Q4 GDP and January monthly CPI to digest today. After the release of all the quarterly partials BBG consensus is forecasting +0.8% Q/Q for the GDP.
• The market attention however is likely to centre on the relatively new, but increasingly important, monthly read of CPI. With the RBA expecting inflation to peak in Q422, today’s print will be scrutinised for clues about the inflation outlook.