ASIA: Government Bond Issuance Today.
Oct-24 22:45
- China to Sell CNY48bn 2054 Bonds.
- India to Sell INR100bn 7.46% 2073 Bonds.
- India to Sell INR220bn 6.79% 2034 Bonds.
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AUD: AUDUSD Approaching 69c, August CPI Coming Up
Sep-24 22:20
Aussie found support from monetary easing in China on Tuesday but then weakened on news the RBA didn’t discuss a rate hike at its September meeting. In the end, AUDUSD rose 0.8% to 0.6892 but was only a mid-range performer in the G10. A lot of the strength was driven by the weaker USD (BBDXY -0.5%), which fell on lower US yields due to a weak consumer confidence reading.
- AUDUSD has cleared key resistance at 0.6824, which opens 0.6900, which the pair is currently approaching. Initial support is at 0.6792, September 23 low.
- The yen underperformed the G10 but was still stronger against the greenback. So AUDJPY rose 0.5% to 98.72 and spent most of the European/US sessions range trading reaching a high of 99.07.
- Kiwi outperformed yesterday driving AUDNZD below 1.09. The pair fell 0.4% to 1.0871 and is currently at 1.0876.
- AUDEUR is up 0.2% to 0.6165 and AUDGBP +0.3% to 0.5139.
- Equities rallied with the S&P up 0.3% and Euro stoxx +1.1%. Oil prices were higher with Brent +1.7% to $75.17/bbl. Copper is 4.1% stronger and iron ore is up to around $96/t driven by China stimulus.
- Today August CPI prints and headline is expected to moderate to 2.7%y/y from 3.5%, driven by government measures. So the focus will be on the trimmed mean, which was 3.8% in July, as that is the RBA’s focus.
US TSYS: Tsys Futures Edge Higher, Short End Outperforms As Curve Steepens
Sep-24 22:10
- Tsys futures closed higher on Tuesday with the short-end out-performing as the 2yr yield tests yearly lows. Futures did trade lower into the US session before weaker-than-expected US consumer confidence caused a strong bounce, with yield curves then bull-steepening. TU closed +0-01⅝ at 104-12¾, while TY closed +0-02+ at 114-27.
- There was a 2yr $69 billion bond auction overnight which drew the expected yield of 3.520%, the lowest for a two-year note auction since August 2022 while the bid/cover ratio was slightly down of prior at 2.590. The solid reception to the 2yr auction, which was effectively at the highs of the day, reinforced the ongoing demand for the front-end of the curve.
- Data was markedly weaker than expected in September. Consumer confidence fell to 98.7 (cons 104.0) for a sizeable slip after an upward revised 105.6 (initial 103.3) in Aug. Declines were seen in both the present situation and expectations components.
- Cash tsys curves steepened with the short end outperforming, yields were 1-5bps lower with the 2yr trading -4.9bps at 3.538%, while the 10yr -2.1bps at 3.728%. The 2s10s curve continues to make new highs climbing to intraday high of 20.213 before closing at 18.406, while the 5s30s taps 62.011 high.
- Projected rate cuts into early 2025 gain traction, latest vs. Tuesday morning levels (*) as follows: Nov'24 cumulative -39.8bp (-38.5bp), Dec'24 -78.6bp (-74.4bp), Jan'25 -113.0bp (-108.0bp).
- Looking ahead to Wednesday's session: MBA Mortgage apps, New Home Sales, $28B 2Y FRN, $62B 17W bill auctions, $70B 5Y at 1300ET.
NZD: AUD/NZD Breaks Bac Below 1.0900, AU CPI Up Later
Sep-24 21:51
- The AUD/NZD fell 0.38% on Tuesday to close at 1.0871, as the NZD benefitting slightly more as China announced stimulus package to support their struggling market. While the AUD also saw some weakness on a slightly move dovish RBA than expected after they didn't consider any rate hikes, however they signaled there is unlikely to be any cuts in the near term.
- The OIS market did however firm slightly post the RBA with 19bps of cuts up from 16bps priced in for the December meeting, while the market is now pricing in roughly an extra 25bps of cuts through to August next year.
- The cross fell below all key moving averages on Tuesday with Initial resistance now seen at just above spot at 1.0882 (200-day EMA) with major resistance seen at 1.0944 (Sep 23/24 Highs), while to the downside initial support is 1.0860 area, with a break here opening a move to the September lows of 1.0789.
- The AU-NZ 2yr swap spread closed 2bps lower on Tuesday at 4.5bps.
- Expiries: 1.0975 ($255.12m), 1.085 ($258.06m) for Sept 27
- Today, we have the CPI at 1130 AEST / 0930 HKT
