AUSSIE BONDS: Richer With US Tsys, Light Local Calendar

In post-Tokyo trade, JGB futures closed little changed, -1 compared to settlement levels, after US tsys finished Tuesday's NY session little changed.

• There is little in this report alone to suggest a meaningful gap between CPI and PCE-in other words, the slight downside miss in core CPI doesn't carry a major re-interpretation for PCE via the components. Note that the April core PCE consensus was 0.24% M/M coming into today, and while this may dip slightly, we doubt forecasts will be radically changed (core CPI came in at 0.22% M/M).
• The greenback has weakened, eroding a solid portion of the prior session advance. Amid the continued bid for major equity indices, the US dollar traded in a more typical manner with risk, weakening against most G10 peers.
• "Nippon Life is looking to reduce its holdings of Japanese government bonds and is seeking investment opportunities in other areas, such as sovereign bonds in Europe and Australia, to diversify its portfolio." (per BBG)
• "Nippon Life Insurance Co. is considering investing in lower-rated collateralised loan obligations (CLOs) to increase yields, as it seeks to diversify its investments abroad." (per BBG)
• Today, the local calendar will see PPI data alongside BoJ Rinban Operations covering 1-3-year and 5-25-year JGBs.

In local morning trade, NZGBs are 7-10bps cheaper despite US tsys finishing Tuesday’s NY session little changed. 

• There is little in this report alone to suggest a meaningful gap between CPI and PCE—in other words, the slight downside miss in core CPI doesn't carry a major re-interpretation for PCE via the components. Note that theApril core PCE consensus was 0.24% M/M coming into today, and while this may dip slightly, we doubt forecasts will be radically changed (core CPI came in at 0.22% M/M).
• As for broader trends, the core CPI six-month rate held at 3.0% annualised for a second month in April, moderated from 3.7% in January, although it’s still a fourth consecutive month above the Y/Y.
• The greenback has weakened, eroding a solid portion of the prior session advance. Amid the continued bid for major equity indices, the US dollar traded in a more typical manner with risk, weakening against most G10 peers.
• Swap rates are 10-14bps higher.
• RBNZ dated OIS pricing is little changed across meetings. 25bps of easing is priced for May, with a cumulative 69bps by November 2025.
• On Thursday, the NZ Treasury plans to sell NZ$200mn of the 4.50% May-30 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 1.75% May-41 bond.

• Gold recovered early losses to finish Tuesday flat on the day.  
• The latest CPI print in the US was softer, giving hope for rate cuts and pushing the USD dollar lower.  
• It is likely that the impact of tariffs is yet to be felt in CPI prints and forecasters remain cautious on the data.  
• Gold however liked the news  and having been down in the morning session in the US, recovered back to where it started.  
• Bullion opens in the Asia trading day at US$3,250.52 and remains lower overall for the week, following a strong decline on Monday.  
• Gold breached the 20-day EMA of $3,275.18 with Monday's sell off.  The 50-day EMA is at $3,167.88