Underlying CPI Back Above 2.0%, Bonds Pressured

Fresh lows for Aussie bond futures in the wake of the Q3 CPI dataset. The headline readings were virtually in line with broader exp. at 3.0% Y/Y & 0.8% Q/Q, but the jump in the trimmed mean print, to 2.1% Y/Y, puts the RBA's preferred underlying measure back above the lower boundary of its 2-3% target band for the first time since Q415. A reminder that the RBA has noted that it will need to see realised inflation sustainably within its 2-3% target band before moving interest rates, and its sanguine view on medium term inflation and wage growth mean that the Bank isn't likely to shift its central opinion on the back of 1 CPI reading (although it may note heightened risks to its central view at next week's monetary policy decision). Still, the market is keen to test the RBA's resolve given the beat in the underlying print, leaving YM -14.0 and XM -4.0 at typing. For reference, ACGB Apr-24, the bond targeted by the Bank's YCT mechanism, last yields 0.18%. Focus will now move to whether the RBA chooses to step in to enforce YCT on Thursday.