US STOCKS: Are The Positives Outcomes Priced In ?
The ESM5 had an overnight range of 5605 - 5671.75, Asia is currently trading 5665. The market traded heavily for most of the overnight session, but the Asian session has started positively as news that US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will meet with China's "lead representative on economic matters" later this week in Switzerland, according to statements released Tuesday.(MNI Policy team)
- From the China side: "*CHINA DECIDES TO TALK TO US AFTER GLOBAL, CHINA INTEREST" - BBG,"*CHINA SAYS ANY TALKS HAVE TO BE EQUAL, BENEFIT EACH OTHER" - BBG.
- The Stock market has seemed to price in a lot of the recent positive sentiment. The reality still feels a little way off with tariffs still high and trade deals not yet finding a resolution. The market will need to start seeing some specifics on these deals this week, and will be hoping the meeting between the US and China bears some fruit.
- “The UK and the US are set to sign a trade deal this week, the FT reported. The UK also agreed to a pact with India.”(per BBG)
- The FOMC on Wednesday will be very important for markets, as traders start to align their views to be more inline with the Fed and have been reducing rate cut expectations. This implies the Fed Put for stocks to be a lot lower from the current market.
- The SPX has had a big bounce from its lows on 4800 handle, but we are approaching some key resistance between 5600-5800, the longer-term sellers should be active around here.
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US TSYS: Futures Gap Higher On Today’s Re-Open
TYM5 is 113-30, +28+ from closing levels in today's Asia-Pac session, after hitting a high of 114-10.
- On Friday, US tsys dipped then bounced after a higher-than-expected March jobs gain was tempered slightly by a down-revision to prior. The latest profile saw 228k after two weak months (111k Jan, 117k Feb) which in turn followed two booming months (261k Nov, 323k Dec).
- US tsys were well supported on Friday but finished off early session bests after headlines filtered through markets that Tsy Sec Bessent was "quietly" attempting to moderate Pres Trump's hardline stance.
- There was also a brief risk-off unwind late morning after Pres Trump tweeted "This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates," but US tsy yields bounced after Chairman Powell's discussion on the economy at SABEW conference. Chair Powell expressed patience, stating that it is a "good time to take a step back and let things clarify" while "uncertainty of new policies" decline over time.
- According to MNI’s technicals team, focus is on technical resistance at 114-16 (2.000 proj of the Jan 13 - Feb 7 - Feb 12 price swing) after having breached round number resistance (114-03.5 high) on Friday.
BONDS: NZGBS: Richer With Global Bonds, Buoyed By Risk-Off, RBNZ On Wed
In local morning trade, NZGBs are sharply richer, with benchmark yields 7-9bps lower. US tsy futures have re-opened sharply higher at 113-31, +30 from closing levels in today's Asia-Pac session.
- The market has started to realise that this is not just a US problem. A raft of Asian economies have reached out to the US, looking to remove levies on US imports or open trade talks.
- However, China unveiled a 34% duty on all US imports, and this will be front centre as the market attempts to digest the implications of this in the Asian session.
- On Friday, US tsys were well supported but finished off early session bests.
- US tsys cheapened then richened after the higher-than-expected March jobs gain was tempered slightly by a down revision to the prior.
- Swap rates are 8-9bps lower.
- The RBNZ Policy Decision is on Wednesday.
- “The RBNZ Shadow Board is in favor of lowering the OCR by 25bps to 3.50% this week. Most Shadow Board members agreed that a 25b cut is justified in April as inflation is contained and activity in the New Zealand economy remains soft: NZIER.” (per BBG)
- RBNZ dated OIS has 31bps of easing priced for April, with a cumulative 106bps by November 2025.
AUD: A$ Falls Further Today On Tariff-Related Risk Aversion, AUDUSD Breaks 60c
AUDUSD broke below 60c to 0.5933, the lowest in over 5 years, as risk sentiment continues to deteriorate following China’s retaliatory 34% tariff on imports from the US. The pair headed back towards 60c but is now at 0.5994. It fell 4.6% to 0.6041 on Friday as concerns grew that Trump’s tariffs will weigh not just on US growth but also the globe’s. The US dollar benefited from flight-to-quality flows and the index rose 1.0%.
- AUDUSD has breached initial support at 0.6012 and the next level is at 0.5994 and 0.5931, briefly, which cancels the recent bullish theme and confirms the resumption of the downtrend started in late September.
- With Aussie underperforming the G10 and the yen outperforming, AUDJPY fell 4% to 88.78, the lowest since January 2022. It has fallen further at the start of today’s APAC session and is currently around 86.93.
- Risk-sensitive kiwi also struggled on Friday but was not as weak as Aussie. AUDNZD was down 1.2% to 1.0797 after a low of 1.0775 earlier. Today it is at 1.0787 after falling to 1.0707.
- All of the G10 was lower against the greenback but the euro was one of the better performers leaving AUDEUR down 3.7% to 0.5512 after a low of 0.5468. It is currently 1.1% lower at 0.5452. AUDGBP was -3% to 0.4684 after a trough of 0.4651 and is -0.8% so far today at 0.4647.
- Equities sank on Friday with the S&P down 6% and Euro stoxx -4.6% and today the S&P e-mini is already 4.1% lower. Oil prices are weaker with Brent -5.8% to $66.06/bbl and has started today down to $63.39. Copper fell 9.1% and iron ore is below $100/t.
- Today ANZ-Indeed job ads for March are released.
