JGBS: Bear-Steepener As Trading Resumes After Long W/E

MNI discusses the impact of U.S. tariffs on the Australian economy. 
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Fossil fuel prices have been hit hard by the imposition of significant tariffs on US imports and China’s retaliation as concerns rise sharply that they will materially impact the global economy and demand for energy. The announcement has coincided with the end of the heating season and the start of the shoulder season before cooling demand increases.

• European gas prices fell 6.8% on Friday to EUR 36.55 off the intraday low of $35.15. They are down 10.1% so far in April.
• Regulations that European gas storage needs to be at 90% on November 1, introduced when Russia invaded Ukraine, are to be extended by two years. The EU parliament will vote on the extension in May. There has been speculation that some flexibility to this rule will be allowed in 2025 given the lower-than-usual level at the end of the heating season and higher futures prices over the spring/summer which penalises refilling purchases.
• European storage was at around 34% full last week, below the 5-year seasonal average of 45%, according to Bloomberg.
• US gas was down 7.6% to $3.94, close to the intraday low, on growth concerns following President Trump’s tariff announcement. It has started this week’s trading falling a further 1.6% to $3.88 but it is off its trough of $3.79 earlier. Below average storage levels and a forecasted cooler start to April have been unable to support prices.
• The US was the world’s largest LNG exporter in 2024 and so the impact of US protectionism and China’s retaliation on global energy demand is also pressuring US gas prices. China targeted US LNG imports with its response to the first 10% tariff earlier this year.
• Trade-related global growth concerns also weighed on Asian gas prices on Friday. Lower prices may attract bargain hunters though ahead of the northern summer. China’s gas use has been weak this year and it has increased its own production and pipeline flows from Russia. 

Global Investors continue to withdraw from Korea with another day of significant outflow alongside Thailand. 

• South Korea: Recorded outflows of -$1,283m Friday, bringing the 5-day total to -$4,436m. 2025 to date flows are -$8,530, m. The 5-day average is -$887m, the 20-day average is -$225m and the 100-day average of -$132m.
• Taiwan: Had inflows of +$19m as of the 2nd, with total outflows of -$3,124m over the past 5 days. YTD flows are negative at -$18,247. The 5-day average is -$625m, the 20-day average of -$505m and the 100-day average of -$256m.
• India: Had outflows of -$345m as of 3rd, with total inflows of $24m over the past 5 days.  YTD flows are negative -$14,006m.  The 5-day average is +$5m, the 20-day average of +$15m and the 100-day average of -$143m.
• Indonesia: Had inflows of $38m as of the 27/3, with total inflows of +$54m over the prior five days.  YTD flows are negative -$1,830m.  The 5-day average is +$11m, the 20-day average -$33m and the 100-day average -$34m
• Thailand: Recorded outflows of -$185m Friday, totaling -$202m over the past 5 days. YTD flows are negative at -$1,331m. The 5-day average is -$40m, the 20-day average of -$34m the 100-day average of -$19m.
• Malaysia: Recorded outflows of -$74m Friday, totaling -$195m over the past 5 days. YTD flows are negative at -$2,338m. The 5-day average is -$39m, the 20-day average of -$54m the 100-day average of -$37m.
• Philippines: Saw outflows of -$13m Friday, with net outflows of -$14m over the past 5 days. YTD flows are negative at -$229m. The 5-day average is -$3m, the 20-day average of +$1m the 100-day average of -$6m.