ASIA STOCKS: Asian Equites Lower Ahead Of Non Farms Later

ACGBs (YM +1.0 & XM -2.0) are 4-5bps stronger after today’s CPI Monthly data for November. 

• Headline CPI rose 2.3% y/y (estimate +2.2%) in November versus +2.1% in October. Trimmed mean CPI rose 3.2% y/y versus +3.5% in October.
• "The CPI excluding volatile items and holiday travel rose 2.8 per cent in the 12 months to November, compared to a 2.4 per cent rise in the 12 months to October. The increase in the annual movement is primarily due to changes in electricity prices." (per ABS)
• "Rents rose 6.6 per cent in the 12 months to November, following a similar annual rise of 6.7 per cent to October.
• Cash ACGBs are 1bp richer to 2bps cheaper, with a steeper curve. The AU-US 10-year yield differential is at -18bps.
• The swaps curve has twist-steepened, with rates 1bp lower to 2bps higher.
• The bills strip is 2-4bps richer after the data.
• RBA-dated OIS pricing is 1-4bps softer across meetings after the data, with July leading. A 25bp rate cut is back to being more than fully priced by April (107%), with the probability of a February cut standing at 61%.
• Before the data, the likelihood of a 25bp cut in April had slipped to 98%, with the February cut probability at 57%. 

Early FX trends are relatively muted in the G10 FX space. The BBDXY USD index is little changed, last just under 1307. 

• AUD/USD was above 0.6240 prior to monthly Nov inflation figures, but eased to lows of 0.6221 after the trimmed mean lost further momentum in y/y terms. Still the A$ is only down slightly for the session, last back near 0.6225. NZD/USD is also off modestly last near 0.5630/35.
• Other majors are a tick higher against the USD, but USD/JPY is near 158.00 (earlier highs were at 158.24), so remaining within recent ranges. EUR/USD is up a touch, close to 1.0350.
• US yields are down a touch, but losses are less than 1bps at this stage, following gains in Tuesday US trade (post stronger US data). US equity futures are higher, with Nasdaq futures up around 0.25% at this stage. Regional equity trends are mixed.
• The data calendar is light for the remainder of today's Asia Pac session (with just Japan consumer confidence on tap).  

Headline CPI rose 2.3% y/y (estimate +2.2%) in November versus +2.1% in October. Trimmed mean CPI rose 3.2% y/y versus +3.5% in October.

• RBA-dated OIS pricing is 1-5bps softer across contracts after the data.
• A 25bp rate cut is back to being more than fully priced by April (110%), with the probability of a February cut standing at 61%.
• Before the data, the likelihood of a 25bp cut in April had slipped to 98%, with the February cut probability at 57%.
• For additional context, 32bps of easing was priced for April just a week ago.

Figure 1: RBA-Dated OIS – Today Vs. Yesterday

Source: MNI – Market News / Bloomberg