AUSSIE BONDS: Slightly Mixed On A Data Light Session

Ongoing outflows from the Indian equity market took a temporary breather on Thursday yet then repeated Friday with one of the largest inflows since early February as regional neighbours all recorded outflows. 

• South Korea: Recorded outflows of -$17m yesterday, bringing the 5-day total to +$1,320m. 2025 to date flows are -$3,883m. The 5-day average is +$264m, the 20-day average is -$109m and the 100-day average of -$97m.
• Taiwan: Had outflows of -$345m yesterday, with total outflows of -$1160m over the past 5 days. YTD flows are negative at -$15,170. The 5-day average is -$232m, the 20-day average of -$657m and the 100-day average of -$231m.
• India: Saw inflows of +$610m as of the 21st, with a total inflow of +$515m over the previous 5 days. YTD outflows stand at -$15,417m. The 5-day average is  +$103m, the 20-day average of -$234m and the 100-day average of -$183m.
• Indonesia: Posted outflows of -$10m yesterday, bringing the 5-day total to -$388m. YTD flows are negative at -$2,035m. The 5-day average is -$78m, the 20-day average is -$55m the 100-day average of -$36m.
• Thailand: Recorded outflows of -$2m yesterday, totaling -$67m over the past 5 days. YTD flows are negative at -$1,009m. The 5-day average is -$13m, the 20-day average of -$37m the 100-day average of -$19m.
• Malaysia: Experienced outflows of -$64m yesterday, contributing to a 5-day outflow of -$347m. YTD flows stand at -$2,046m. The 5-day average is -$69m, the 20-day average of -$57m the 100-day average of -$36m.
• Philippines: Saw outflows of -$4m yesterday, with net inflows of +$30m over the past 5 days. YTD flows are negative at -$184m. The 5-day average is +$6m, the 20-day average of 0 the 100-day average of -$7m.

ACGBs (YM -2.0 & XM -4.5) are weaker but off Sydney session lows on a data-light session.

• Today we will see the Federal Budget presented around 1930 AEDT, ahead of tomorrow's February CPI data.
• A Federal Election is likely to be called soon after. The Budget is expected to show deficits across the forecast horizon with additional expenditure likely in an attempt to win votes.
• “Australia’s February CPI report is likely to show headline inflation slowing. We estimate CPI gains slowed to 2.4% year on year from 2.5% in January, led by softer prices of food and fuel. Core inflation gauges have been trending higher in recent months but remain in the Reserve Bank of Australia’s 2%-3% target band.” (per BBG)
• Cash US tsys are little changed in today's Asia-Pac session after yesterday's heavy session.
• Cash ACGBs are 2-4bps cheaper with the AU-US 10-year yield differential at +12bps.
• Swap rates are 3-4bps higher.
• The bills strip is -2 to -3 across contracts.
• RBA-dated OIS pricing is slightly firmer across meetings today. A 25bp rate cut in April is given a 4% probability, with a cumulative 66bps of easing priced by year-end (based on an effective cash rate of 4.09%).

Aussie is moderately stronger during today’s APAC trading driven by stronger equity sentiment but a lacklustre start to HK/China shares has capped its gains. AUDUSD is up 0.1% to 0.6291 after a high of 0.6295. It fell to 0.6280 before strengthening. The USD index is off its intraday high to be down slightly on the day.

• AUDNZD has approached 1.10, a level it has not been at since 17 March, reaching 1.0989. It is currently 0.1% higher at 1.0988.
• AUDJPY is off its intraday high of 94.92 and is up slightly to 94.75. AUDEUR is 0.1% higher at 0.5823 and AUDGBP +0.1% to 0.4869.
• Equities are mixed with the ASX up 0.5%, CSI 300 +0.2% and Hang Seng down 0.8%. The S&P e-mini is flat. Oil prices are little changed with WTI -0.1% to $69.04/bbl. Copper is up 0.3% and iron ore remains around $102/t.
• Australia’s FY2026 budget is presented around 1930 AEDT. Also later the Fed’s Kugler and Williams speak and US January/February housing data, March consumer confidence & Richmond Fed business conditions and March German Ifo survey are released.