WPI-Inspired Downtick Quickly Unwound
A WPI-inspired blip lower in ACGBs is quickly retraced, with both YM & XM trading back above pre-release levels, while the wider cash ACGB benchmarks sit 4.5-6.5bp richer on the day, as the early steepening impetus holds. Bills sit 1-14bp richer through the reds, with bull flattening remaining in play there. RBA dated OIS saw similar data-related blips to ACGBs, and now sit in line to a touch below pre-data levels.
- The marginally firmer than expected Q3 WPI data is largely in line with the picture painted in the survey measures that have helped to guide monetary policy in recent months, so the readings don’t really represent much in the way of game changing information for the RBA at this juncture. This comes after the Bank slowed its pace of tightening to 25bp hikes over its last couple of meetings.
- A bid in U.S. Tsys will also be aiding the fading of the data-inspired move.