AUSSIE BONDS: Richer After Core CPI Prints Lower Than Expected
ACGBs move as much as 2-5bp higher (YM +15.0 & XM +12.5) after trimmed mean CPI prints a lower than expected +1.2% Q/Q and +6.6% Y/Y in Q1 versus expectations of +1.4% and +6.7%. Headline inflation printed a slightly higher than expected 7.0% Y/Y (6.9% estimate), but was down from +7.8% in Q4. Services annual inflation however recorded its largest increase since 2001 driven by higher prices for holiday travel, medical services, rents and restaurants.
- Cash ACGBs are 2-3bp richer after the data with the 3/10 curve 2bp steeper.
- The AU/US 10-year yield differential is -3bp at -9bp.
- Swap rates are similarly 2-3bp lower to be 11-13bp lower on the day.
- Bills shunt 3-5 richer after the data with the strip flatter and pricing +7 to +14.
- RBA-dated OIS builds on the morning softening to be 1-2bp softer after the data. The cumulative tightening by August has been reduced to 10bp from 12bp ahead of the data and 22bp ahead of the ANZAC day holiday.
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US TSYS: Off Session Lows
A lack of follow through on the early move lower in tsys, as a lack of immediate offering of policymaker support for the US banking sector on Monday has seen tsys tick off session lows. This leaves cash tsys 2bps cheaper to 1bp richer across the major benchmarks, the curve has twist flattened pivoting on 7s.
- TYM3 deals at 116-03, -0-00+, a couple of ticks off the top of the observed 0-10 range.
AUD: Aussie Stabilises After Friday’s Weakness
AUDUSD has been range trading today and is currently down 0.1% to 0.6649 after reaching a high of 0.6659 and low of 0.6637. The USD index is flat.
- Aussie is also little changed against the major crosses with AUDNZD +0.1% to 1.0720, AUDJPY +0.1% at 86.97, AUDEUR 0.6177 and AUDGBP 0.5432.
- Equity markets in the region are mixed with the ASX up 0.3% but the KOSPI down 0.4%. S&P e-minis are up 0.4% on reports the US will continue to support the banking system. WTI oil is little changed at around $69.30/bbl. Copper is up 0.1%. Iron ore is higher at over $120/t.
- The Fed’s Jefferson speaks later on monetary policy (2200 BST). ECB’s Elderson and BoE’s Bailey are also scheduled to speak. US Dallas Fed Index for March prints as well as the German IFO. Tomorrow in Australia key retail sales data print.
CNH: CNY Fixing - Close To Neutral
The USD/CNY fix printed at 6.8714, versus a Bloomberg consensus of 6.8711.
- Today's fix is a +3pips surprise in USD/CNY terms, so very close to neutral. The rolling 5-day sum of the error term is back to -46pips (-63pips on Friday).
- In terms of USD/CNH, we have drifted slightly higher today, but remain well within recent ranges, last just above 6.8700.
