AUSSIE BONDS: AU-US 10Y Diff Is Near Middle Of Range
Jul-16 03:00
The AU-US 10-year cash yield differential currently stands at -7bps, positioned near the middle of the +/- 30bps range that has held since November 2022.
- A simple regression of the 10-year yield differential against the AU-US 1-year forward 3-month swap rate (1Y3M) differential over the past year suggests the current spread is slightly below fair value at -3bps.
- The 1Y3M differential, a key gauge of expected relative policy trajectories over the next 12 months, has traded within a 40bp range this year and is currently in the top half of the range at ~-5bps after last week’s surprise decision by the RBA to leave the cash rate unchanged at 3.85%.
- In early February, the 1Y3M differential had declined approximately 100bps since mid-September 2024, falling from +60bps to -40bps.
Figure 1: AU-US Cash 10-Year Yield Differential (%)
Source: Bloomberg Finance LP / MNI
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
CHINA: Property Data Turns Down Again
Jun-16 02:53
- As new and used home prices (ex Shanghai) continue in their deflationary spiral, other data is showing signs of turning downwards after periods of improvement.
- China's Residential Property Sales and Property Investment YTD turned down again in May.
- Residential Property sales YTD YoY fell -2.8% (from -1.9% in April), the worst result this year.
- Property Investment YTD YoY declined -10.7% in May, from -10.3% in April and the worst result in over five years.
- There has been speculation as to the need for further policy stimulus with bond markets rallying post the data release.
ASIA STOCKS: Large Outflow for India Thursday
Jun-16 02:34
Large inflows across major markets was the theme last week, despite India seeing large outflow on Thursday and flows tapering off on Friday for other markets.
- South Korea: Recorded outflows of -$84m Friday, bringing the 5-day total to +$1,796m. 2025 to date flows are -$7,777. The 5-day average is +$359m, the 20-day average is +$184m and the 100-day average of -$85m.
- Taiwan: Had outflows of -$5m as of Friday, with total inflows of +$2,242 m over the past 5 days. YTD flows are negative at -$10,373. The 5-day average is +$448m, the 20-day average of +$63m and the 100-day average of -$112m.
- India: Had outflows of -$383m as of the 12th, with total inflows of +$391m over the past 5 days. YTD flows are negative -$10,577m. The 5-day average is +$78m, the 20-day average of -$24m and the 100-day average of -$86m.
- Indonesia: Had inflows of +$29m Friday, with total inflows of +$36m over the prior five days. YTD flows are negative -$2,934m. The 5-day average is +$7m, the 20-day average +$14m and the 100-day average -$29m.
- Thailand: Recorded inflows of +$10m as of Friday, with inflows totaling +$18m over the past 5 days. YTD flows are negative at -$2,148m. The 5-day average is +$4m, the 20-day average of -$23m and the 100-day average of -$21m.
- Malaysia: Recorded outflows of -$50m as of Friday, totaling -$105m over the past 5 days. YTD flows are negative at -$3,620m. The 5-day average is -$24m, the 20-day average of -$28m and the 100-day average of -$24m.
- Philippines: Saw inflows of +$12m yesterday, with net outflows of -$1m over the past 5 days. YTD flows are negative at -$515m. The 5-day average is $0m, the 20-day average of -$15m the 100-day average of -$5m.
AUSTRALIA: Consensus Expects Labour Market Remained Tight In May
Jun-16 02:26
The highlight of the week, which doesn’t include many events, will be May jobs data on Thursday. Bloomberg consensus is expecting that the status quo continued last month with Australia’s labour market remaining tight. A 20k rise in new jobs is forecast, in line with the 3-month average, with the unemployment and participation rates stable at 4.1% and 67.1% respectively.
- Westpac’s lead index for May is released on Wednesday. It posted two straight monthly falls in March and April but the 6-month rate, which leads detrended growth by 3 to 9 months, remains positive. While it continues to signal a recovery over H2 it is now suggesting that it should be slower. April fell 0.01% m/m to be up 0.2% 6m/6m annualised down from 0.5%.
- There are no RBA events this week.
