US TSYS: Asia Wrap - Yields Try Find A Base
Apr-17 04:18
TYM5 has traded heavy with a range of 111-05+ to 111-16 during the Asia-Pacific session. It last changed hands at 111-06, down 0.07 from the previous close.
- The US 10-year yield has moved higher, dealing around 4.31% from a close around 4.27%.
- The market is trying to see positives emanating from the US-Japan trade talks, with stocks holding onto their session gains.
- Jerome Powell crushed the hopes of any traders still expecting the Fed to rescue them with cuts. Signalling a wait-and-see approach and tipping price stability over employment, thus removing any notion of a Fed Put.
- “Japanese investors sold 512 Billion Yen worth of foreign bonds in the week ended April 11, a slower pace than the previous week.”(per BBG)
- “This marks the sixth straight week of outflows from overseas debt, amid a 2.4% drop in treasuries, the biggest decline since 2001.”(per BBG)
- Dips back towards 4.25% support for the 10-year have found sellers first up.
- Data/Events: Housing starts, Initial Jobless claims
Fig 1: Jap Foreign Bond Flows
Source: MNI - Market News/Bloomberg
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
BONDS: NZGBS: Subdued Session, FOMC Decision (Wed) & Q4 GDP (Thu)
Mar-18 04:00
NZGBs closed little changed after dealing in relatively narrow ranges in today’s data-light local session.
- NZ-US and NZ-AU 10-year yield differentials closed 1-2bps wider.
- Cash US tsys are 1-2bps richer in today’s Asia-Pac session. The focus is on Wednesday’s FOMC decision.
- Swap rates closed unchanged after dealing 1-2bps higher earlier.
- RBNZ dated OIS pricing closed flat to 2bps firmer across meetings, with late 2025 leading. 24bps of easing is priced for April, with a cumulative 63bps by November 2025.
- Tomorrow, the local calendar will see Q1 Westpac Consumer Confidence and Q4 Current Account Balance data ahead of Q4 GDP on Thursday.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 5.0% May-54 bond.
- The RBNZ will start the repurchase program of the Sep-25 inflation-indexed bond on March 21. The operation has no implications for monetary policy stance.
GOLD: Gold Consolidates Above $3,000
Mar-18 03:47
- Gold’s seemingly relentless march higher continues as the $3,000 barrier is breached and new highs achieved.
- Opening at $3,000.67, gold appeared set for a quiet day before a surge after lunch to reach new highs of $3,015.13, before settling at $3,010.50
- Gold’s rally appears to have been supported by news reports of fresh military strikes on Hamas by Israel which could ultimately unwind any gains made towards a ceasefire.
- Up over 15% year to date, golds ongoing rally has been fuelled by expectations for interest rate cuts, inflation concerns and tariff risks.
- Stockpiles of US gold exchange warehouses recorded their biggest decline in three months, following a three-month frenzy ahead of the implementation of tariffs.
OIL: Crude Continues To Climb On Geopolitical Developments
Mar-18 03:30
Oil prices have trended gradually higher during APAC trading today as the geopolitical risk premium grows. Brent is up 0.3% to $71.26 and WTI 0.3% higher at $67.75, both below initial resistance levels. Both benchmarks are slightly off their intraday peaks. The USD is up 0.2%.
- Crude has found support from rising geopolitical tensions with the US targeting Houthi rebels in Yemen and saying it will blame Iran for any attacks on Red Sea shipping. In addition, Israel is striking Gaza again as Hamas won’t release the remaining hostages. Also presidents Putin and Trump will speak later on Tuesday about Ukraine.
- Supply trends remain a focus given OPEC is likely to stick to its output normalisation plans in April and the US intends to increase production. The IEA still expects excess supply in 2025. Today US industry-based oil inventory data is released, which has recently shown a crude stock build but a product drawdown.
- The effectiveness of stricter enforcement of sanctions on Iran is unclear as it has found ways around restrictions on its shadow fleet. But tighter sanctions could reduce global supply by 1mbd, which is substantial. It was the 9th largest producer in 2022.
- Later US February housing data, IP/capacity and trade prices print. Euro area January trade, March ZEW survey and Canadian February CPI are also released.
