AUSSIE BONDS: AUCTION PREVIEW: ACGB Dec-30 Supply Due

In post-Tokyo trade on Friday, JGB futures closed little changed, +1 compared to settlement levels, after US tsys finished the NY session modestly cheaper on Friday as early risk-off sentiment moderated.

• On Friday, Republicans rejected Senate Democrats on ACA subsidy as the US Govt shutdown looks to enter it's sixth week next week. However, Bloomberg is reporting, "Senate Republican leader John Thune said a deal is "coming together" as he planned a Sunday vote to end the US government shutdown."
• Bloomberg reports, " The LDP becomes more flexible in targeting budget surplus; CDP cites "fiscal discipline issues". On an NHK program on the 9th, LDP Policy Research Council Chairman Takayuki Kobayashi said, "Rather than being fixated on a single-year balance, we need to think about it a little more flexibly" regarding the target of achieving a primary balance surplus, an indicator of fiscal soundness."
• Nikkei says, "Japan seeks to boost investment with upcoming economic stimulus. Japan's economic stimulus package is set to include tax cuts to spur investment focused around 17 key industries, including AI and semiconductors, and multi-year budget allocations to make policy more predictable, the Nikkei newspaper reported."
• Today, the local calendar will see BOJ Summary of Opinions (Oct. MPM) and Leading/Coincident Index data alongside a speech by BOJ Nakagawa in Okayama.

• RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
• RES 2: 95.960 - High Apr 7 (cont.)
• RES 1: 95.900 - High Oct 17
• PRICE: 95.670 @ 16:09 GMT Nov 7
• SUP 1: 95.510 - Low Sep 3  
• SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14 
• SUP 3: 95.275 - Low Nov 14  (cont) and a key support

Aussie 10-yr futures slipped lower last week on the back of hotter-than-expected inflation data. This returned prices lower despite nascent signs of a technical recovery as recently as late October. The sustainability of the pullback will be dependent on prices holding above key short-term support at 95.510, the Sep 3 low. Near-term resistance remains 95.780, the Sep 12 high. A clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg. 

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There performance of the onshore versus the offshore (Hang Seng) continues to diverge.  Over the last month, the gains onshore have moderated and are barely positive whilst the Hang Seng has declined.  This could potentially represent the two differing views on the China economy at present.  The first being that the economic expansion is weak and likely to decline, the other being that the economy is in the early stages of a broader growth cycle.