US TSYS: Asia Tentatively Buys The Fed Dip
Regional participants have shown some tentative dip buying interest with the major cash Tsy benchmarks running little changed to ~2bp richer on the day, as 5s lead the bid, resulting in some light bull steepening of the curve after yesterday’s post-Fed twist flattening. Tsys did recover from worst levels of the day post-FOMC (as fleshed out earlier), while the fact that Ukrainian President Zelenskiy has labelled the ongoing Russia-Ukraine negotiations as “difficult” has provided some modest support for the space. TYM2 is moving to fresh session highs at typing, last +0-06+ at 124-14, operating within a 0-10 range thus far.
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US TSYS: A Touch Richer
Cash Tsys are ~0.5-1.5bp richer, with modest bull flattening observed shortly after the re-open. It may be the case that the region is a little tentative re: the Russia-Ukraine situation, but it may be as simple as some regional dip-related demand/short covering in play, with U.S. 10s failing to sustainably break above 2.00% in yield terms once again on Monday. TYH2 +0-04 at 126-03+.
AUD: Aussie Recoups Losses, RBA Minutes Eyed
AUD/USD shed a handful of pips Monday, with the Russia-Ukraine situation stoking further market volatility. Diplomatic efforts to defuse the crisis continued, while Russian President Putin & Foreign Min Lavrov used a staged television address to express support for further talks with the West. Elsewhere, Ukrainian President Zelensky walked back his prediction that Russia would attack on Wednesday, playing down that comment as "sarcastic" and mocking earlier press reports. The choreographed showing from Putin & Lavrov brought reprieve to risk assets, paving the way for AUD/USD to recoup the bulk of its earlier losses.
- The rate last operates at $0.7131, little changed on the day. Topside focus falls on Feb 10 high of $0.7249 and a break here would bring Jan 20 high of $0.7277 into play. On the flip side, losses past Monday's low of $0.7086 would clear the way to Feb 4 low of $0.7052.
- Monthly labour market report, due Thursday, headlines the local data docket during the remainder of this week. Elsewhere, the RBA will publish the minutes from their most recent monetary policy meeting later this morning.
JAPAN: Govt Official Warns Of Impact of High Prices on Sentiment
High prices caused by surging crude oil prices will have an adverse impact on consumer sentiment in the coming months, a senior official at the Cabinet Office said on Tuesday. Japanese consumer spending has been clearly falling since mid-January on the back of the quasi-emergency measures to combat the spread of Omicron and a slower pace of vaccinations, high-frequency data showed. “If the high costs will not be transferred to retail prices, corporate profits will be squeezed,” the official told reporters, adding it is still uncertain how private consumption will evolve for the rest of the first quarter - on MNI Policy MainWire now, for more details please contact sales@marketnews.com.
