US TSYS: Cash Open

TYM5 is trading 111-12, up 0-07 from its close. 

• The US 10-year yield closed in the US around 4.3083%, it's a holiday in Japan today.
• The Wall Street Journal via BBG - "Beijing is considering ways to address the Trump administration’s gripes over China’s role in the fentanyl trade... potentially offering an off-ramp from hostilities to allow for trade talks to start.”
• “Jerome Powell won’t be fired as Fed chair ahead of his scheduled exit, Trump suggested as he again urged the “already late” central bank to cut rates.”(per BBG)
• MNI Economist on FOMC Decision - “The FOMC will extend its series of rate holds to a third meeting in May, keeping the Fed funds target rate at 4.25-4.50% while maintaining its forward guidance in the Statement. At the press conference, Chair Powell is likely to warn about the risks to both sides of the dual mandate. Don’t anticipate any meaningful changes in the Statement, though any signal that the Fed is looking seriously at “soft” survey data to assess the outlook could be significant.
• The 10-year Yield range seems to be 4.10% - 4.45%, with the pivot the 4.30% area for now.
• Data: ISM Services PMI

Aussie outperformed on Friday as better-than-expected US payroll data drove an improvement in risk appetite. AUDUSD trended higher through the day and then stepped up following the figures to reach a peak of 0.6470. It finished up 1.0% to 0.6445 and has continued higher today to be +0.2% to 0.6445. The USD index fell 0.4% on Friday and is currently down another 0.1%.

• AUDUSD is consolidating and now approaching the 9 December high of 0.6471, thereafter the level to watch is 0.6528, 29 November 2024. The underlying trend remains bullish. Initial support is at 0.6344, 24 April low.
• The pound was the only G10 currency to fall against the USD on Friday leaving AUDGBP up 1.1% to 0.4859, close to the intraday high, and has started today lower at 0.4857. AUDEUR rose 0.9% to 0.5704 and is currently down again though at 0.5692.
• AUDJPY was 0.7% higher at 93.44 but down 0.2% to 93.20 today. AUDNZD rose 0.3% to 1.0841 after a peak of 1.0847 and is now at 1.0830.
• Equities rallied with the S&P up 1.5% and Euro stoxx +2.4% but US equity futures have started today lower down around 0.6%. Oil prices are down sharply following OPEC’s decision to increase output with WTI -4.1% to $55.88/bbl. Copper rose 1.5% on Friday and iron ore increased to around $97/t.
• Today the April Melbourne Institute inflation gauge and ANZ job ads are released. 

ACGBs (YM -6.0 & XM -4.5) are cheaper after a heavy session for US tsys on Friday. PM Albanese's increased majority following the weekend’s national election may also be weighing on the market. 

• US tsys finished near session lows on Friday after higher-than-expected nonfarm payrolls at 177k (sa, cons 138k), of which private contributed 167k (sa, cons 125k), triggered the early reversal. However, two-month revisions of -58k offset the 39k beat for nonfarm payrolls, with a similar story for private (a 42k surprise vs. -48k two-month revision).
• S&P Global PMIs for April have printed: The Composite Index fell to 51 from 51.6 in March, and the Services Index fell to 51 from 51.6 in March.
• Cash ACGBs are 5-6bps cheaper with the AU-US 10-year yield differential at -4bps.
• Swap rates have risen by a similar amount.
• The bills strip has bear-steepened, with pricing -2 to -6.
• RBA-dated OIS pricing is flat to 7bps firmer across meetings today. A 50bp rate cut in May is given a 2% probability, with a cumulative 104bps of easing priced by year-end.
• Today, the local calendar will also see MI Inflation and ANZ-Indeed Job Advertisements.