U.S. CPI & Fed-Driven Cheapening

YM & XM operate above their respective Sydney & overnight session lows, just. The former is -15.5, while the latter is -11.0. Offshore developments were in the driving seat overnight, with headlines dominated by the (marginal) upside surprises for U.S. CPI data and ’22 FOMC voter Bullard calling for a cumulative 100bp of rate hikes by the end of June, while he noted that he is undecided re: the need for a 50bp hike in March (deferring to Chair Powell on the matter). This comes as participants assess a less supportive cash flow backdrop in ACGBs after the RBA’s outright bond buying scheme came to an end yesterday (a decision will be made in May re: the reinvestment of cash flows stemming from maturing debt held under the scheme).

• An address from RBA Governor Lowe headlines the domestic docket on Friday. Lowe will appear in front of the House of Representatives Standing Committee on Economics. Expect continued focus on the RBA’s willingness to run the economy hot as it looks to push unemployment levels even lower in a bid to foster meaningful wage growth, seemingly remaining convinced that inflationary picture in Australia is different to that which is being observed elsewhere.
• We will also get A$1.0bn of ACGB Nov-24 supply and the release of the AOFM’s weekly issuance slate.