US TSYS: Cash Bonds Twist-Steepen In Today’s Asia-Pac Session
Apr-11 00:08
TYM5 is dealing at 110-05, -0-14 from closing levels in today's Asia-Pac session.
- Cash US tsys are showing a twist-steepening in today’s Asia-Pac session, with benchmark yields 3bps lower to 5bps higher, pivoting at the futures-linked 7-year.
- Yesterday, US tsys finished with a bear-steepener despite lower-than-expected CPI inflation measures.
- Yesterday’s auction of 30-year bonds was met with strong demand. The $22B 30Y auction re-open stopped through: 4.813% high yield vs. 4.838% WI; 2.43x bid-to-cover vs. 2.37x in the prior month. Peripheral measures saw an indirect take-up 61.88% vs. 60.45% prior; direct bidder take-up 25.82% vs. 22.65% prior; primary dealer take-up 12.30% vs. 16.89% prior.
- Aside from headline risk, the focus turns to Friday's data: PPI at 0830ET and University of Michigan Sentiment at 1000ET.
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AUSSIE BONDS: ACGB Dec-34 Auction Result
Mar-12 00:07
The AOFM sells A$800mn of the 3.50% 21 December 2034 bond, issue #TB168:
- Average Yield (%): 4.4519 (prev. 4.6378)
- High Yield (%): 4.4525 (prev. 4.640)
- Bid/Cover: 3.1688x (prev. 2.8875x)
- Allotted at Highest Accepted Yld as % of Bid at that Yld (%): 75.6 (prev. 49.1)
- Bidders: 34 (prev. 34), 12 (prev. 17) successful, 3 (prev. 10) allocated in full
MNI: JAPAN FEB CORP GOODS PRICE INDEX +4.0% Y/Y; JAN +4.2%
Mar-11 23:51
- MNI: JAPAN FEB CORP GOODS PRICE INDEX +4.0% Y/Y; JAN +4.2%
- JAPAN FEB CORP GOODS PRICE INDEX 0.0% M/M; JAN +0.3%
CNH: USD/CNH Back Sub 200-day EMA Support, China To World Equity Ratio Surges
Mar-11 23:45
USD/CNH tracked near 7.2280 in latest dealings, CNH gaining 0.50% for Tuesday's session. This was close to USD index losses (BBDXY down 0.46%), as the EU bloc currencies continued to rally. CNH did outperform safe havens like JPY though. USD/CNY spot finished up at 7.2302. The CNY CFETS basket tracker was still lower though at 98.83, per BBG (off a further 0.12%).
- USD/CNH is now back under its 200-day EMA (near 7.2385). Further downside could see 7.2000 round figure support tested.
- Focus is likely to rest on whether we see any material shift in the USD/CNY fixing today, with the fixing not drifting too from 7.1700 for an extended period of time.
- The rebound in core yields didn't impact CNH sentiment meaningfully. Yesterday saw onshore equities close higher, the CSI 300 up 0.32%. The China to global equity ratio is now above early Oct highs, see the chart below, the white line (note USD/CNH is inverted on the chart).
- Unwinding of US exceptionalism plays, coupled with inflows into China related equities, with Hong Kong seeing strong inflows from the mainland, while inflows from South Korea into Hong Kong equities have also picked up, is likely aiding broader underlying China related asset sentiment, including the yuan. Regulators also vowed to boost long term funds into equity and other capital markets (see this BBG link).
- Bloomberg states though that trade talks between the US and China are stuck at lower levels. This could limit USD/CNY downside if little progress is seen over the medium term.
Fig 1: China To World Equity Ratio & USD/CNH (Inverted)
Source: MNI - Market News/Bloomberg
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