AUSSIE BONDS: At Session Bests Aided By US Tsys and NZGBs
In Asia-Pac trade, ACGBs are stronger (YM +7.0 & XM +9.5) and at session highs as US tsys extend their gains from Thursday. With a light economic calendar and domestic headlines, local traders have been happy to follow US tsys. Currently, cash US tsy yields are 1-2bp lower, and the curve is flatter. Additionally, the sharp richening in NZGBs after the release of RBNZ inflation expectations data is likely to have contributed to the ACGB's move to session highs.
- Cash ACGBs are 8-10bp richer with the 3/10 curve 2bp flatter and the AU-US 10-year yield differential -4bp at -7bp.
- Swap rates are 6-7bp lower with EFPs 2-3bp wider.
- The bills strip twist flattens with pricing -1 to +5.
- RBA dated OIS pricing is mixed with pricing 1bp firmer for June but 2-5bp softer for meetings beyond August.
- The local calendar is light until the RBA Minutes for May are released early next week.
- The AOFM announced a relatively low round of nominal ACGB issuance for next week with the sale A$700mn of the 2.75% 21 June 2025 bond on Wednesday, 17 May. AOFM issuance is set to remain light for the FY ahead with between A$1-1.5bn per week on average.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EURUSD TECHS: Trend Needle Points North
- RES 4: 1.1185 High Mar 31 2022
- RES 3: 1.1076 High Apr 1 2022
- RES 2: 1.1033 High Feb 2 and key resistance
- RES 1: 1.0938/0973 High Apr 6 / 4
- PRICE: 1.0928 @ 05:49 BST Apr 12
- SUP 1: 1.0834 20-day EMA
- SUP 2: 1.0788 Low Apr 3
- SUP 3: 1.0755 50-day EMA
- SUP 4: 1.0631 Low Mar 20
EURUSD maintains a bullish tone and the recent pullback appears to be a correction. Resistance at 1.0930, the Mar 23 high, has been breached. This level marked a key short-term hurdle for bulls and the clear break reinstates the recent bull theme and signals scope for 1.1033, the Feb 2 high. Support at the 20-day EMA, at 1.0834, remains intact and the 50-day EMA intersects at 1.0755. A clear break of these two averages would be bearish.
BUND TECHS: (M3) Trades Through The 20-Day EMA
- RES 4: 140.30 High Mar 20 and the bull trigger
- RES 3: 140.00 Round number resistance
- RES 2: 139.54 High Mar 24
- RES 1: 136.88/138.09 High Apr 11 / 6 and key near-term resistance
- PRICE: 135.86 @ 05:26 BST Apr 12
- SUP 1: 135.71/134.70 Low Apr 11 / Low Mar 31 and the bear trigger
- SUP 2: 134.15 61.8% retracement of the Mar 2 - 20 rally
- SUP 3: 133.33 Low Mar 15
- SUP 4: 132.70 76.4% retracement of the Mar 2 - 20 rally
Bund futures traded lower Tuesday and the contract remains below last week’s high of 138.09 (Apr 6). Price is through the 20-day EMA, at 135.99 and a continuation lower would expose 134.70, the Mar 31 low and a bear trigger. For bulls, a move above 138.09 is required to reinstate the recent bullish theme and this would signal scope for gains above the 138.00 handle. Key resistance is still far off at 140.30, the Mar 20 high.
BONDS: NZGBS: Twist Steepen Ahead of NZGB Supply Tomorrow
NZGB cash curve twist steepens, with the 2-year benchmark 1bp richer and the 10-year benchmark 4bp cheaper at the close. This movement was linked to the weekly supply announcement from the NZ Treasury. Implied long-end swap spread narrowed with swap rates 1-2bp lower at the close.
- The NZ Treasury plans to sell NZ$200mn of the May-28 bond, NZ$150mn of the Apr-33 bond and NZ$50mn of the May-51 bond tomorrow.
- The NZGB auctions on April 6th also resulted in a steepening of the curve, with stronger demand seen for short-end supply, likely due to concerns of over-tightening by the RBNZ.
- Today's price action may also have been influenced by RBNZ's recent decision statement, which expressed concerns about the inflation risks associated with fiscal spending financed through borrowing, as opposed to re-prioritisation or spending deferrals.
- RBNZ dated OIS pricing is flat to 4bp firmer across meetings with 20bp of tightening priced for May.
- With Total Card Spending in March (+3.1% M/M, 16.1% Y/Y) suggesting very little deceleration in retail sales values in Q1, the RBNZ is unlikely to find any comfort in today’s data.
- The market’s focus now shifts to the release of US CPI and FOMC Minutes later today.
