AUSSIE BONDS: Bear-Flattener After US Payrolls, May-28 Supply Due

ACGBs (YM flat & XM -0.5) are little changed after US tsys erased Asian session gains that followed a solid JGB bond auction, closing modestly cheaper amid the upbeat stock market. US yields finished 1-2bps higher. 

• Big tech helped the NASDAQ advance 0.81% Tuesday, with the S&P 500 gaining 0.6% while the Dow was up 0.5%. These follow the strength in May with the NASDAQ and S&P 500 now higher on the year.
• Risk appetite was boosted by talk that President Trump could meet with President Xi this week, underpinning hopes for a trade deal.
• S&P Global PMIs for May have printed: Services Index falls to 50.6 from 51 in April; and Composite Index falls to 50.5 from 51 in April.
• Cash ACGBs are little changed with the AU-US 10-year yield differential at -19bps.
• The bills strip is unchanged.
• RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut in July is given a 79% probability, with a cumulative 81bps of easing priced by year-end (based on an effective cash rate of 3.84%).
• Today, the local calendar will see Q1 GDP, with the market expecting +0.4% q/q and +1.5% y/y.
• The AOFM plans to sell A$800mn of the 1.50% 21 June 2031 bond on Friday.

Gold prices fell 0.8% to $3353.30/oz on Tuesday as the US dollar strengthened again with the USD index up 0.4% and US yields picked up. Bullion is still up 2% this week though, consistent with its bullish theme, as geopolitical tensions rose over the weekend. The trade situation also remains highly uncertain and is being monitored closely. Gold has started today slightly higher at $3357.5.

• Gold finished off its intraday low of $3333.23, which remained above initial support at $3297.0, 20-day EMA. Moving average studies are in a bull-mode position signalling a dominant uptrend. Initial resistance is at $3392.2.
• Equities rallied with the S&P up 0.6% and Euro stoxx +0.4%. The S&P e-mini has started today slightly higher. Oil prices rose with WTI +1.3% to $63.34/bbl. Copper is up 0.1%, while silver is down 0.7% to $34.52. 

In local morning trade, NZGBs are 2bps richer despite US tsys finishing ~2bps cheaper across benchmarks. The NZ-US 10-year yield differential is -4bps at +13bps. 

• US tsys finished well off early session bests after higher-than-expected JOLTS job openings and an up-revision to prior openings.
• The JOLTS report for April was, on balance, one of relative stability in another look at early reaction to Trump administration policies. Job openings surprisingly increased (7391k (sa, cons 7100k) in April after a marginal upward revision of 7200k (initial 7192k) in March), while the hire rate pushed to its highest since September. However, the quit rate pushed back lower again after what to us was a surprising uptick back in March.
• S&P e-minis were just off May 29 highs after the White House announced that President Trump will sign 50% steel and aluminium import tariffs on Wednesday.
• Swap rates are 2-3bps lower.
• RBNZ dated OIS pricing is little changed across meetings. 6bps of easing is priced for July, with a cumulative 30bps by November 2025.
• Today, the local calendar will be empty.
• On Thursday, the NZ Treasury plans to sell NZ$200mn of the 3.00% Apr-29 bond, NZ$200mn of the 4.50% May-35 bond and NZ$50mn of the 5.00% May-54 bond.