HALISTER1: Buy Aussie Linkers as RBA May Raise Inflation Forecast, ANZ Says

Buy Aussie Linkers as RBA May Raise Inflation Forecast, ANZ Says

(Bloomberg) -- ANZ recommends buying Australia’s February 2022 inflation indexed bonds and simultaneously selling July 2022 nominal securities at a spread of 176bps, senior rates strategist Martin Whetton writes in note Thursday.
  • Targets 200bps with stop-loss at 165bps
  • ANZ is looking for a slight upward revision in 2017 headline CPI from RBA, while also being wary of upside inflationary surprises coming from Cyclone Debbie
  • RBA is more comfortable that domestic inflation has stabilized and deflationary aspects of the past year have abated
  • Recent data such as labor costs in NAB business survey, strong employment gains and ANZ job ads may result in a slightly more positive outlook
  • One factor that isn’t fully priced is positive momentum on infrastructure, which could have implications for prices over time
  • NOTE: ANZ also recommends betting on steepening of Australia’s sovereign curve on outlook for debt issuance

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Martin Whetton (Australia & New Zealand Banking Group Ltd)

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