US TSYS: Cash Open

TYM5 is trading 111-02, unchanged from its close. 

• The US 10-year yield closed in the US around 4.3433%, it's a holiday in Japan today.
• Bloomberg- “Global real money is buying Treasuries following the recent cheapening. While there is more supply to come, taking yields higher in the interim, by the end of the week real money buys should be rewarded.”
• “After $58 billion in 3-year Treasuries stopped through, logic says that sets up for a similar result on the $42 billion reopening sale Tuesday as well as the $25 billion 30-year reopened bond on Thursday. And with ~$14 billion in IG bonds pricing with ease, corporate treasurers are likely to issue even more Tuesday. Rate locks and position adjusting linked to the supply will likely take yields higher in the days ahead.”
• The 10-year Yield range seems to be 4.10% - 4.45%, price has moved above the 4.30% pivot and with more supply to come this week a push back to 4.45% is possible before the buyers come in.
• Data: US Trade Balance

Oil prices fell sharply following OPEC’s decision to increase output by a second larger-than-expected +400kbd from June with the risk of more but they recovered some of their losses during European trading. Excess supply in 2025 was already expected last year and US trade policy and increased OPEC production have added to concerns over the size of the surplus. OPEC has changed its policy to increase market share and impact overproducing members with lower prices.

• WTI is down 1.8% to $57.23/bbl after falling to $55.30 close to the start of the session. It reached $57.70 before levelling off. Monday’s move confirmed the medium-term bearish trend in WTI but it held above the bear trigger at $54.67. It is currently a bit lower at $57.14.
• Brent finished down 1.7% to $60.25/bbl after starting the day at $58.50, still above the bear trigger at $58.00. It reached a high of $60.82. Initial resistance is at $64.91, 20-day EMA. Trade volumes were thinner from the UK holiday.
• Next week US President Trump is scheduled to travel to the Middle East including Saudi Arabia, UAE and Qatar.
• Hopes that trade deals with the US will be announced soon, maybe even by the end of the week according to Trump, may provide a floor to oil prices which have been very concerned about the impact of US tariffs on global energy demand.

ACGBs (YM -3.0 & XM -3.5) are modestly cheaper after further selling of US tsys on Monday. 

• A stronger-than-expected ISM services index helped US equities recover early losses and pushed up US yields. The UK and some Asian markets were closed for holidays.
• The US ISM services index unexpectedly rose 0.8pts in April, against expectations for a modest fall following the steep fall in March. Both the employment and new orders indices rose. The prices paid index rose 4.2pts to a more than two-year high of 65.1.
• Focus remains on Wednesday's FOMC rate announcement.
• Cash ACGBs are 2-4bps cheaper with the AU-US 10-year yield differential at -4bps.
• The bills strip is flat to -2 across contracts.
• RBA-dated OIS pricing is little changed 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 see Building Approvals and Household Spending data.
• This week, the AOFM plans to sell A$300mn of the 4.75% 21 June 2054 bond today, A$1000mn of the 3.75% 21 April 2037 bond on Wednesday and A$700mn of the 2.75% 21 November 2029 bond on Friday.