BONDS: NZGBS: Closed With A Twist-Steepening As US Tsys Weigh
Nov-14 03:35
NZGBs closed with a twist-steepening of the 2/10 curve. Benchmark yields finished 4bps lower to 4bps higher, with the NZ-US and NZ-AU 10-year yield differentials little changed.
- Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after yesterday’s twist-steepening. The US calendar sees PPI and jobless claims data later today.
- Today’s weekly supply saw mixed results, with cover ratios ranging from 2.28x (May-35) to 4.12x (Apr-37).
- NZ released a number of monthly CPI series for October which account for around 40% of the total CPI index. Most major components posted a monthly rise but food prices posted their first drop since May, leaving the annual rate at 1.2%.
- With rental growth down on a year ago, food steady and petrol negative, the RBNZ is likely to be reassured that inflation should stay in the band in Q4. It will have updated forecasts at its November 27 meeting.
- Swap rates closed 2bps lower to 2bps higher, with the 2s10s curve steeper.
- RBNZ dated OIS pricing is 1-7bps softer across 2025 meetings. A cumulative 87bps of easing is priced by February, with 51bps by year-end.
- Tomorrow, the local calendar will see the BusinessNZ Manufacturing PMI.
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JGBS: Cash Twist-Flattener At Lunch
Oct-15 03:13
At the Tokyo lunch break, JGB futures are weaker but off lows, -9 compared to settlement levels, as trading resumed after yesterday’s holiday.
- The local data calendar has August's final industrial production, along with capacity utilization figures later today. There is also a Liquidity Enhancement Auction for 5-15.5-year OTR JGBs.
- Cash US tsys are flat to 2bps richer, with a flattening bias, in today’s Asia-Pac session after being closed yesterday for Columbus Day. There will be more fed speakers later today with SF's Daly, Gov Kugler, and Atlanta's Bostic. It will be another slow data session with just Oct Empire Manufacturing and NY Fed inflation expectations.
- The cash JGBs curve has twist-flattened, pivoting at the 30-year, with yields 4bps higher (1-year) to 1bp lower (30-year). The benchmark 10-year yield is 1.4bps higher at 0.966% versus the cycle high of 1.108%.
- Swap rates are flat to 3bps higher, with a steepening bias. Swap spreads are tighter out to the 20-year and wider beyond.
GOLD: Hovering Just Below All-Time Highs
Oct-15 03:09
Gold is steady in today’s Asia-Pac session, after closing 0.3% lower at $2648.54 on Monday.
- Monday's gains, building on strong advances from Thursday and Friday, have brought bullion close to its all-time closing high of $2,672.38.
- With US data light and the US bond market closed for the Columbus Day holiday yesterday, Fed speakers took centre stage. Minneapolis's Kashkari added little new to previous comments, Fed Gov Waller triggered an initial hawkish reaction with his call for "more caution" on the pace of rate cuts in contrast to his relative dovishness last month.
- There will be more fed speakers later today with SF's Daly, Gov Kugler, and Atlanta's Bostic on tap. It will be another slow data session with just Oct Empire Manufacturing and NY Fed inflation expectations.
- Lower rates are typically positive for gold, which doesn’t pay interest.
- “Gold purchases from central banks have been a key driver in bullion’s record-smashing rally this year. But officials rarely signal ahead of time when buying is top of mind. In a break to that form, reserve managers from the central banks of Mexico, Mongolia and the Czech Republic on Monday sang the praises of bigger holdings.” (Per BBG)
ASIA STOCKS: Investors Continue to Sell Asian Equities, Although Flows Light
Oct-15 02:22
The rotation out of EM Asian equities continues, albeit it small sizes.
- South Korea: Saw inflows of +$29m yesterday, but over the past 5 sessions netted outflows of -$583m, while YTD flows remain positive at +$9.82b. The 5-day average is -$117m, which is higher than the 20-day average of -$246m but below the 100-day average of -$53m.
- Taiwan: Recorded outflows of -$113m yesterday, with the past 5 sessions bringing in +$344m, while YTD flows are still negative at -$12.53b. The 5-day average is +$69m, below the 20-day average of +$165m, and above the 100-day average of -$169m.
- India: Experienced outflows of -$480m Friday, with the past 5 sessions totaling -$3.09b, while YTD flows stand at +$4.33b. The 5-day average is -$618m, higher than the 20-day average of -$131m but above the 100-day average of +$73m.
- Indonesia: Saw outflows of -$19m yesterday, bringing the past 5 sessions to -$259m, with YTD flows at +$2.83b. The 5-day average is -$52m, lower than the 20-day average of -$27m but slightly above the 100-day average of +$28m.
- Thailand: Recorded outflows of -$35m Friday, market was closed on Monday. The past 5 sessions netting -$190m, while YTD flows are -$3.10b. The 5-day average is -$38m, which is below both the 20-day average of -$20m and the 100-day average of -$13m.
- Malaysia: Posted outflows of -$15m yesterday, with the past 5 sessions netting -$26m, while YTD flows are +$544m. The 5-day average is -$5m, better than the 20-day average of -$19m and in line with the 100-day average of +$5m.
- Philippines: Saw outflows of -$9m yesterday, bringing the past 5 sessions to -$10m, while YTD flows remain positive at +$69m. The 5-day average is -$2m, lower than the 20-day average of +$16m, but above the 100-day average of +$4m.
Table 1: EM Asia Equity Flows
