US TSYS: Asia Wrap - A Subdued Session
The TYM5 range has been 110-19+ to 110-23 during the Asia-Pacific session. It last changed hands at 110-21+, almost unchanged from the previous close.
- The US 2-year yield has edged higher, dealing around 3.945%, up 0.01 from its close.
- The US 10-year yield has extended higher, dealing around 4.42%, up 0.03 from its close.
- (Bloomberg) - “FED'S LOGAN SAYS STIMULATIVE FISCAL POLICY COULD BOOST DEMAND, IF HIGH INF. EXPECTATIONS GET ENTRENCHED, COSTLY TO FIX, IF BALANCE OF RISK SHIFTS, FED WELL PREPARED TO RESPOND.”
- Bloomberg - “ President Trump just sent out a long social media post making it clear his commitment to tariffs is as strong as ever following a court ruling that deemed the levies were illegal. That underscores that efforts to contest the measures via the courts may do more to boost uncertainty than to ameliorate the impact of the imposts, adding to pressure on the US dollar and equities.”
- The 10-year has come back down to test its support, likely aided by month-end rebalancing. Yields need to hold above 4.35% to continue to build for a move higher.
- Data/Events : Personal Spending, PCE, MNI Chicago PMI, U. of Mich Survey.
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JGBS: Slightly Mixed After Domestic Data Drop
At the Tokyo lunch break, JGB futures are little changed, +1 compared to the settlement levels.
- March preliminary industrial production was below market forecasts, down 1.1%m/m, versus -0.4% expected. In y/y terms, we came in at -0.3% versus 0.8% forecast (0.1% was the prior outcome). The y/y trend hasn't been able to see much upside traction for a number of years now. The current y/y pace is slightly above averages for 2023/24, but only marginally.
- Retail sales were slightly below market forecasts. We were -1.2%m/m, against a 0.7% forecast, with Feb revised to a 0.4% gain. In y/y terms, we rose 3.1%, against a 3.5% forecast and 1.3% in Feb. The y/y trend is around mid-range of the past 12 months, as we have oscillated between flat to +5%. The authorities remain focused on driving sustained/positive real household spending growth, aided by positive real wages growth. The next round of labour earnings data is due next Friday.
- Cash US tsys are slightly mixed, with a flattening bias, in today's Asia-Pac session after yesterday's modest rally.
- Cash JGBs are mixed, with benchmark yields 1bp lower (5-year) to 1bp higher (30-year). The benchmark 10-year yield is 0.3bp higher at 1.321% versus the cycle high of 1.596%.
- Swap rates are 1-2bps lower. Swap spreads are mixed.
AUSTRALIA DATA: Monthly CPI Inflation Stabilises At End Of Quarter
Monthly trimmed mean and headline data for March were unchanged from February at 2.7% y/y and 2.4% respectively. The latter was higher-than-forecast. The trimmed mean has been around 2.7% for four consecutive months now, which is consistent with the RBA’s projection that it could remain around this rate and not make any further progress towards the 2.5%-target mid-point in 2025. Given global developments though, the outlook remains highly uncertain.
Australia CPI trimmed mean vs services y/y%
- March seasonally adjusted headline CPI rose 0.5% m/m to be steady at 2.4% y/y, while excluding volatile items & holiday travel also rose 0.5% m/m but eased 0.1pp to 2.6% y/y, also close to the mid-point of the 2-3% target band. However, 3-month annualised momentum has picked up to 4.0% for both.
Australia CPI headline vs ex volatile items 3-mth annualised momentum % sa
Source: MNI - Market News/ABS
- March services inflation rose to 3.9% y/y from 3.6%, while non-tradeables were steady at 3.2%. Goods moderated 0.2pp to 1.1% y/y, lowest since November, and tradeables were unchanged at 0.9%.
- The ABS observes that food & non-alcoholic beverages (+3.4%), alcohol & tobacco (+6.7%) and housing (+1.8%) made the largest contributions to annual headline inflation in March.
MNI EXCLUSIVE: MNI Discusses How Diminished USD Could Impact Global Neutral Rate
