CHINA: Data Preview – CPI and PPI to Show Little Improvement for March

• RES 3: 97.190 - High May 5 2023
• RES 2: 96.730/932 - High Sep 17 / 76.4% of Mar-Nov ‘23 bear leg 
• RES 1: 96.360 - High Dec 11  
• PRICE: 96.230 @ 16:09 GMT Mar 10
• SUP 1: 95.900 - Low Jan 14  
• SUP 2: 95.760 - Low 14 Nov ‘24
• SUP 3: 95.480 - Low Jan 11 2023 and a major support 

Aussie 3-yr futures have pulled back from their most recent highs - a correction. A resumption of gains would signal scope for 96.360, the Dec 11 high. Clearance of this level would open 96.730, the Sep 17 ‘24 high. On the downside, a stronger reversal lower from current levels would signal a resumption of the downtrend. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low. 

In Today's Asia-Pac session, TYM5 is 111-14+, 0-04 from closing levels. 

• Overnight, the short end led the rally for US tsys, mirroring a sharp drop in equities. The 2-year yield was down 12bps at 3.88%, with the 10-year down 9bps at 4.21%.
• Concerns over a US economic slowdown/recession were evident in the sharpest drop in equities in over 2 years, with S&P and Nasdaq futures off over 3% each and cyclical stocks bearing the brunt (tech -4.5%, consumer discretionary -4.1%).
• Data was thin: the NY Fed's February consumer expectations survey showed an uptick in 1Y and 3Y inflation views to multi-month highs, but not in nearly as dramatic a shift as the latest UMich consumer surveys.
• The US STIR market added about half a 25bp rate cut to the Fed easing path through end-2025, with at least 3 cuts now firmly expected (the first by June).

ACGBs (YM +8.0 & XM +6.0) are sharply stronger as heightened US recession fears drove a bull-steepening in US tsys. The US 2-year yield was down 12bps at 3.88%, with the 10-year down 9bps at 4.21%.

• Concerns over a US economic slowdown/recession were evident in the sharpest drop in equities in over 2 years. Poor guidance from major firms, including big tech, has exacerbated the bearish outlook.
• Data was thin: the NY Fed's February consumer expectations survey showed an uptick in 1Y and 3Y inflation views to multi-month highs, but not in nearly as dramatic a shift as the latest UMich consumer surveys.
• Tuesday's key release is January JOLTS job openings, with February CPI on Wednesday.
• Cash ACGBs are 7-9bps richer with the AU-US 10-year yield differential at +15bps.
• Swap rates are 6-8bps lower, with the 3s10s curve steeper.
• The bills strip has bull-flattened beyond the first contract, with pricing +4 to +9.
• Today, the local calendar will see Westpac Consumer and NAB Business Confidence data.
• The AOFM plans to sell A$300mn of the 2.75% 21 May 2041 bond today and A$800mn of the 3.50% 21 December 2034 bond tomorrow.