AUSSIE BONDS: 10yr Futures Upside Test Of 95.90 Close By, Supported By US Moves
Aussie bond futures are little changed in the first part of Thursday dealings, 10yr up a touch to 95.88, keeping recent highs around 95.90 within striking distance. The lead from US Tsys futures was broadly positive, following a solid 20yr auction, and risk off in the equity space. From a technical standpoint, the recent break above 95.78 (the Sep 12 high), signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg. On the downside, key short-term support to watch has been defined at 95.510, the Sep 3 low. 3yr futures are down 1bp to 96.64, presenting a less upbeat technical picture (recent highs rest at 96.70).
- ACGB yields are mixed, slightly firmer at the front end, with the 3yr at 3.35% (up 1bps), while the 10yr is little changed near 4.10%. This leaves the 3/10s curve slightly flatter at +75.6bps, but above recent lows.
- The AU-US10yr spread is up from recent lows sub +10bps, last +15.5bps, keeping us within recent ranges.
- A 25bp rate cut in November is assigned around 65% probability, with a cumulative 23bps of easing priced by year-end. Market confidence in a Nov rate cut has waned this past week.
- This caution aligns with the RBA’s pattern over the past year of easing less than what six-month forward expectations had implied. Those expectations currently sit around 3.20%, compared with the cash rate of 3.60%.
- The local data calendar remains empty today, with Oct preliminary PMIs out tomorrow, whilst RBA's Bullock will also deliver some remarks.
- Today has a 2032 inflation linked bond sale as well.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
ASIA: Government Bond Issuance Today
- Hong Kong to Sell HK$64.37 Billion 91-Day Bills
- Hong Kong to Sell HK$15 Billion 182-Day Bills
- Hong Kong to Sell HK$5 Billion 364-Day Bills
- Bank of Thailand to Sell THB 65bn of 91-Days Bills
- Bank Indonesia to Sell 32D SVBI Bills
- Bank Indonesia to Sell 181D SVBI Bills
- Bank Indonesia to Sell 95D SVBI Bills
- Bank Indonesia to Sell 273D SVBI Bills
- Bank Indonesia to Sell 365D SVBI Bills
- Philippines To Sell PHP 25.0Bln 2044 Bonds (PH0000058786**)
- Philippines To Sell PHP 10.0Bln 2028 Bonds (PIBD0728D649*)
JPY: USD/JPY - Move Stalls Above 148.00, Back To The Middle Of The Range
The overnight range was 147.66 - 148.26, Asia is currently trading around 147.70. USD/JPY stalled above 148.00 and continues to chop around sideways without really going anywhere. The USD retracement stalled though as sellers reemerged even with some clearly hawkish rhetoric from Fed speakers overnight. The price is still in the middle of its recent 146-149 range, and we need a convincing break on either side to see some clearer direction again. Neither the FOMC nor the BOJ were able to provide any clarity, the market will start turning its focus towards payrolls which seems a lifetime away.
- Bloomberg - “Deutsche Bank Says Dollar to Extend Drop Against Yen This Year. George Saravelos, head of FX research anticipates more weakness for the dollar, predicting that it will fall below 140 yen by year-end. Says the need to address inflation in Japan is growing. BOJ rate hikes at a time when the Fed is cutting should support the yen, he says. “Starting from a very undervalued position, the yen has a long runway provided the political pieces fall into place following the upcoming LDP election”
- “Musalem, Bostic, and Hammack were leaning on the more hawkish side,” said Macquarie’s Thierry Wizman. “I am surprised that the USD is weakening and stocks are rising. It seems as if no one really believes the Fed or Powell when they admonish the market for thinking that there are 4-5 more rate cuts on the way” - BBG
- Options : Close significant option expiries for NY cut, based on DTCC data: 145.00($856m), 145.50($750m), 146.00($476m). Upcoming Close Strikes : 145.00($1.52b Sept 24), 152.00($1.67b Sept 26) - BBG.
- CFTC data shows last week asset managers reduced their JPY longs slightly +71162( Last +87239), leveraged funds again used the dip to add their short position believing the support will continue to hold -58811(Last -49951).
Fig 1 : USD/JPY Spot 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA: Coming Up in Asia Today
| 0430GMT | 1130HKT | 1330AEDT | Thailand Car Sales AUGUST |
| 0500GMT | 1200HKT | 1400AEDT | Malaysia CPI YoY AUGUST |
| 0600GMT | 1300HKT | 1500AEDT | HSBC India PMI Composite |
| 0600GMT | 1300HKT | 1500AEDT | HSBC India PMI Mfg |
| 0600GMT | 1300HKT | 1500AEDT | HSBC India PMI Services |
| 0600GMT | 1300HKT | 1500AEDT | Singapore CPI YoY AUGUST |
| 0600GMT | 1300HKT | 1500AEDT | Singapore CPI NSA MoM AUGUST |
| 0600GMT | 1300HKT | 1500AEDT | Singapore CPI Core YoY AUGUST |
| 0800GMT | 1500HKT | 1700AEDT | Malaysia Foreign Reserves |
| 0900GMT | 1600HKT | 1800AEDT | Taiwan Export Orders YoY AUGUST |
source: Bloomberg Finance LP / MNI
