CNH: USD/CNY Fixing Remains Steady

The BoJ offers to buy a total of Y1.075tn of JGBs from the market:

• Y300bn worth of JGBs with 1-3 Years until maturity
• Y300bn worth of JGBs with 3-5 Years until maturity
• Y325bn worth of JGBs with 5-10 Years until maturity
• Y150bn worth of JGBs with 10-25 Years until maturity

While November headline inflation picked up 0.2pp to 2.3% y/y, the focus is on trimmed mean given current state & federal electricity rebates and this underlying measure eased 0.3pp to 3.2%, where it was in September. However, the RBA continues to focus on quarterly CPI data and it wants to be confident that inflation will return sustainably to the band. It is too early to tell if monthly inflation is trending lower again, thus attention will be firmly on Q4 CPI on January 29.

Australia monthly CPI y/y%

• Domestically-driven services prices were updated in November and they moderated to 4.2% y/y, the lowest since April, down from 4.8%. The series is a bit volatile and November was in line with the 2024 average but 3-month momentum has been trending lower since June. Non-tradeables rose to 3.2% y/y from 3.0% but below September’s 3.5%.
• Goods inflation remained subdued at 0.8% y/y but up from 0.1% in October with tradeables up 0.1pp to 0.6% y/y. RBA Governor Bullock warned previously that the disinflationary impact from goods prices is probably done.
• The timing of electricity rebate payments contributed to the pickup in headline inflation. The ABS said that prices fell 21.5% y/y in November after -35.6% y/y. Excluding all subsidies, electricity would have been down 1.7% y/y.
• Petrol prices put less downward pressure on headline inflation in November falling 10.2% y/y after -11.5%, and they posted their first monthly rise since June. 
• Rents increased 6.6% y/y after 6.7%, as the market remains tight. New dwelling inflation eased to 2.8% y/y from 4.2%, the lowest since July 2021. The ABS notes that builders are offering deals to attract customers.
• Food & non-alcoholic beverages rose 2.9% y/y down from 8.5% in October. 

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%.