AUSSIE BONDS: AOFM Weekly Issuance Slate
The AOFM has released its weekly issuance slate:
- On Monday 13 February it plans to sell A$300mn of the 1.75% 21 June 2051 Bond.
- On Tuesday 14 February it plans to sell A$150mn of the 2.50% 20 September 2030 Indexed Bond.
- On Wednesday 15 February it plans to sell A$700mn of the 4.50% 21 April 2033 Bond.
- On Thursday 16 February it plans to sell A$500mn of the 26 May 2023 Note, A$1.0bn of the 23 June 2023 Note & A$500mn of the 11 August 2023 Note.
- On Friday 17 February it plans to sell A$500mn of the 4.25% 21 April 2026 Bond.
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JGBS: Futures Off Lows, 20- To 30-Year Zone Struggles Ahead Of Supply
JGB futures have chipped away at overnight losses in early Tokyo trade, given the move away from Tuesday’s lows in U.S. Tsys (which JGB futures did not participate in during overnight dealing), leaving the contract -8 at typing. The major cash JGB benchmarks sit 1bp richer to 1bp cheaper across the curve, with nothing in the way of uniform flattening/steepening moves observed, as the 20- to 30-Year zone struggles ahead of today’s 30-Year JGB auction. Local headline flow remains light, leaving wider matters and setup for supply at the fore.
AUSSIE BONDS: Knee-Jerk Move Lower On Data Reversed
Slightly firmer than expected monthly CPI data (+7.3 Y/Y headline and +5.6% trimmed mean vs. BBG survey expectations of +7.2% & +5.5%, respectively), coupled with a firmer than expected retail sales print (+1.4% M/M vs. BBG median +0.6%, alongside a revision to the prior month with the surprise -0.2% print adjusted to +0.4%), applied some brief pressure to the ACGB space, which pared back from extremes relatively quickly.
- The move away from post-data cheaps may have been a product of one data vendor posting an erroneous headline CPI print of +7.4% Y/Y. Wider cash ACGBs run ~4bp cheaper across the curve, while YM & XM are -4.0, a touch above early Sydney levels, aided by U.S. Tsys trading marginally firmer on the day.
- The ABS noted that the CPI data is indicating ongoing inflationary pressures, while “the most significant contributors to the annual rise in November were Housing (+9.6%), Food and non-alcoholic beverages (+9.4%), Transport (+9.0%), Furniture, household equipment and services (+8.4%) and Recreation and culture (+5.8%).”
- When it came to the retails sales data the ABS noted that “the rise in turnover was driven by Black Friday sales, which boosted spending on clothing, footwear, furniture, and electronic goods… Given the increasing popularity of Black Friday sales, the smaller increase in October may reflect consumers waiting to take advantage of discounting in November, particularly in light of cost-of-living pressures.”
- The net message from this is that inflation/cost-of-living pressures remain acute in Australia, a matter the RBA is well aware of.
AUD: Firmer Data Boosts AUD
AUD/USD hit a high of 0.6914 post the better than expected retail sales and CPI data for Nov. We have stabilised somewhat now, last just below 0.6910, but the A$ is outperforming against the rest of the G10. Yesterday's high in AUD/USD was close to 0.6930, while on Monday we topped out at 0.6950.
- Headline inflation printed at 7.3% y/y, versus 7.2% forecast. The trimmed mean was 5.6%, 5.5% was expected. Both inflation measures showed sequential gains from October in y/y terms and still fairly broad based price pressures. Retail sales posted a solid +1.4% m/m gain, +0.6% was the forecast, while October was also revised up meaningfully, to +0.4% from -0.2% originally reported.
- At the margin, the data should raise the odds of further RBA action in February.
- The AU-US 2yr government bond yield spread has firmed a touch post the data, last around -92bps, although this is little changed from levels that prevailed this time yesterday.
