AUD: AUDUSD Recovers Post-CPI With Yield Rebound & Rising Iron Ore

US bond futures have edged higher in the Asia morning session, with the 10-Yr failing to break below a key technical.  Opening at 112-18+  TYH6 was near to the 100-day EMA of 1132-15+ but has bounced higher in early trade to be up by +02 to 112-18+

Cash is stronger across the curve with yields -0.2 - -0.6 lower with short and intermediate maturities outperforming.  

• The 2-Yr is at 3.556%    -0.6bps
• The 5-Yr is at 3.708%    -0.5bps
• The 10-Yr is at 4.133%  -0.4bps
• The 30-Yr is at 4.791%  -0.2bps. 

Ahead tonight is a 13 and 26 week bill auction, with the focus being the U$58bn 3-Year auction.  

RBA-dated OIS pricing is slightly firmer today, showing tightening across all meetings, with the probability of a 25bp hike rising from 2% tomorrow to 105% by August and 141% by December 2026. 

• After today’s move, pricing is 9-40bps firmer across the curve beyond December 2025, than pre-Monthly CPI levels (26 November), led by December 2026. 

Figure 1: RBA-Dated OIS – Current Vs. Pre-CPI Monthly

Source: Bloomberg Finance LP / MNI

Last week the PBOC withdrew 7-day liquidity, adding 3-month liquidity.  The week ahead has (relative to last) a more moderate redemption schedule and likely to see the resumption of some moderate injections. 

• The PBOC issued CNY122.3bn of 7-day reverse repo at 1.4% during this morning's operations.
• Today's maturities CNY107.6bn.
• Net liquidity injects CNY14.7bn.
• The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
• The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.40%, from prior close of 1.43%.
• The China overnight interbank repo rate is at 1.31%, from the prior close of 1.31%.
• The China 7-day interbank repo rate is at 1.40%, from the prior close of 1.40%.