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Yields Shunt Higher After CPI Data, RBA Hunter Fireside Chat Tomorrow

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ACGBs (YM -13.0 & XM -15.0) are 3-4bps cheaper after the release of hotter-than-expected CPI Monthly data for April. However, futures have managed to ebb away from the session’s worst levels.

  • April CPI inflation came in at 3.6% y/y after 3.5% in March, the second straight monthly rise. This is particularly noteworthy given that many services components were not updated given it is the first month of the quarter. The underlying trimmed mean picked up to 4.1% from 4.0%. Inflation remains sticky and heading towards the RBA’s upwardly revised 3.8% forecast for Q2 keeping it on hold.
  • Cash ACGBs are 12-15bps cheaper on the day with the AU-US 10-year yield differential at -15bps versus -20bps before the data.
  • Swap rates are 10-13bps higher on the day, with the 3s10s curve steeper.
  • The bills strip has bear-steepened, with pricing -2 to -13.
  • RBA-dated OIS pricing is 4-12bps firmer on the day for meetings beyond August. Only 2bps of easing is priced by year-end from an expected terminal rate of 4.38%.
  • Tomorrow, the local calendar will see Private Capital Expenditure and Building Approvals data. Also, Assistant Governor (Economic) Sarah Hunter will also partake in a Fireside Chat at the Australasian Investor Relations Association (AIRA) annual conference.
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ACGBs (YM -13.0 & XM -15.0) are 3-4bps cheaper after the release of hotter-than-expected CPI Monthly data for April. However, futures have managed to ebb away from the session’s worst levels.

  • April CPI inflation came in at 3.6% y/y after 3.5% in March, the second straight monthly rise. This is particularly noteworthy given that many services components were not updated given it is the first month of the quarter. The underlying trimmed mean picked up to 4.1% from 4.0%. Inflation remains sticky and heading towards the RBA’s upwardly revised 3.8% forecast for Q2 keeping it on hold.
  • Cash ACGBs are 12-15bps cheaper on the day with the AU-US 10-year yield differential at -15bps versus -20bps before the data.
  • Swap rates are 10-13bps higher on the day, with the 3s10s curve steeper.
  • The bills strip has bear-steepened, with pricing -2 to -13.
  • RBA-dated OIS pricing is 4-12bps firmer on the day for meetings beyond August. Only 2bps of easing is priced by year-end from an expected terminal rate of 4.38%.
  • Tomorrow, the local calendar will see Private Capital Expenditure and Building Approvals data. Also, Assistant Governor (Economic) Sarah Hunter will also partake in a Fireside Chat at the Australasian Investor Relations Association (AIRA) annual conference.