Twist-Steepening, Inflation Gauge, Job Ads & HH Spending Data Due

ACGBs (YM +3.0 & XM -1.5) have twist-steepened after US tsys’ strong close to the week, led by the short-end. Aggressive Fed rate cut expectations were revived by a cooler-than-expected PPI report which more than offset Thursday's slightly hotter CPI. Some haven demand also provided support amid increased worries over tensions in the Red Sea after the U.S. and U.K. attacked Houthi targets in Yemen.

• Investors have slashed expectations for hawkish surprises from the Federal Reserve this year, while they see a growing risk of such moves from central banks in the eurozone and other regions, Bank of America’s latest monthly sentiment survey shows. (See Bloomberg link)
• Cash ACGBs have twist-steepened too, yields 3bps lower to 1bp higher. The AU-US 10-year yield differential is 4bps wider at +14bps.
• Swap rates are flat to 4bps lower, with the 3s10s curve steeper.
• The bills strip is richer, with pricing +1 to +6, early reds leading.
• RBA-dated OIS pricing is 1-5bps softer across meetings beyond February, with December leading.
• Today, the local calendar sees the MI Inflation Gauge, Job Advertisements and CBA Household Spending data.
• TCV has launched a new A$-denominated Sep-38 fixed-rate benchmark bond, UBS said. Bond initial price guidance of EFP+115-119bps, equating to ACGB 3.75% 21 Apr-37 +103.4-107.4bps. Pricing is expected to take place Jan. 16.