AUSSIE BONDS: Cheaper & At Cheaps On A Data-Light Session

ACGBs (YM -4.0 & XM -3.0) are modestly mixed after the release of April CPI data.

• April headline inflation was unchanged at 2.4% y/y, slightly higher than expected, while the trimmed mean picked up 0.1pp to 2.8% y/y. The focus is on the latter as the headline is likely to be impacted by government electricity rebates until year-end. Underlying inflation has been sitting around 2.7/2.8% since December, and the RBA expects 2.6% for Q2, which is released on July 30.
• Cash US tsys have bear-steepened in today's Asia-Pac session, with yields flat to 3bps higher.
• Cash ACGBs are 3bps cheaper on the day, with the AU-US 10-year yield differential at -14bps.
• Swap rates are 1-3bps higher after the CPI data.
• The bills strip has cheapened after the data, leaving pricing -3 to -6 across contracts.
• RBA-dated OIS pricing is 1-4bps firmer across meetings after the data. A 25bp rate cut in July is given a 64% probability (70% pre-data), with a cumulative 73bps (70bps pre-data) of easing priced by year-end.
• Tomorrow, the local calendar will see Q1 Private Capital Expenditure data.
• The AOFM plans to sell A$1200mn of the 4.25% 21 March 2036 bond on Friday.

Ahead of tomorrow’s decision by the BOK, the Kospi in South Korea was the regional outperformer as it achieves new highs for 2025 as large cap chipmakers join value stocks in the run up to next week’s election.  Shares of holding companies continue to perform as pushes to reform the corporate structure grow louder. 

Chinese bourses did very little today as volatility remains low in the region's largest economy as investors wait for the next update on tariff discussions.  BYD fell in Hong Kong for a third day straight on concerns of discounting. BYD is down over -2.00% today and down over 12% for the week, weighing heavy on the Hang Seng and other EV related stocks.  

• The Hang Seng is down today by -0.55% and trading very heavy for the week.  The CSI 300 is up a mere +0.09%, Shanghai Comp +0.07% and Shenzhen down -0.12%.
• The KOSPI is the regional outperformer today, rising +1.66% easily wiping out yesterday's modest losses.  
• The fact that the FTSE Malaysia KLCI was flat today will come as welcome relief given falling nine of the last 12 trading days.  
• The Jakarta Composite did very little today also yet remains up over 6% month to date making it the best performer of the major markets.
• In Singapore the Straits Times is up +0.50% whilst the PSEi in the Philippines is up +1.40%.  
• The NIFTY 50 closed lower by -0.70% yesterday and carried that over to today and is currently down -0.25%

NZGBs closed 4-9bps cheaper, with a flatter curve.

• The RBNZ cut rates 25bp to 3.25% following a vote that included an option to leave rates unchanged. The vote wasn’t unanimous, with one dissenter. Despite this, the OCR path was revised down to show a trough 25bp below February’s at 2.85%.
• In his first press conference as Governor, Hawkesby noted that this was the first vote on the direction of rates in two years—something that typically occurs at inflection points and highlights the current high level of uncertainty. With policy rates now in the “neutral zone,” he emphasised that the MPC is positioned to “respond to developments as they occur,” indicating that further easing is not guaranteed and future moves will depend on incoming data and the evolving outlook.
• Swap rates closed 7-10bps higher.
• RBNZ-dated OIS pricing closed 6-10bps firmer across meetings versus pre-RBNZ levels. Markets had fully priced in today’s 25bp cut ahead of the decision. A total of 32bps of easing is now expected by November 2025.
• Tomorrow, the local calendar will see the RBNZ Governor in front of the Parliament Select Committee on MPS. ANZ Business Confidence is also scheduled for release.
• The NZ Treasury also plans to sell NZ$225mn of the 4.50% May-30 bond and NZ$225mn of the 4.25% May-36 bond.