AUSSIE BONDS: Cheaper After Subdued Session Despite HH Spend Undershoot
ACGBs (YM -5.0 & XM -5.0) are weaker after trading in relatively narrow ranges in today’s session.
- This came despite Australia household spend for Jan printing a little weaker than forecast. The m/m print rose 0.3%m/m versus 0.4% forecast. This saw the y/y outcome print at 4.6%, versus 5.1% forecast and 5.0% prior. Yesterday's national accounts also showed some slowing in household consumption growth.
- Cash US tsys are flat to 2bps cheaper in today's Asia-Pac session.
- Cash ACGBs are 5bps cheaper with the AU-US 10-year yield differential at +68bps.
- (MT Newswires) "Commonwealth Bank of Australia (ASX:CBA) said that it still expects the Reserve Bank of Australia (RBA) to hold rates in March and raise in May as the latest household spending data completed the major data set ahead of a rate decision, according to a Thursday report by the bank." - via BBG
- The bills strip has bear-steepened, with pricing -1 to -6.
- RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 26% for March to 121% by June and 198% by December 2026.
- Tomorrow, the local calendar will see Foreign Reserves.
- The AOFM also plans to sell A$800mn of the 1.50% 21 June 2031 bond on Friday.
Bloomberg Finance LP
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BONDS: NZGBS: Closed Richer Before RBA Decision, NZ-US 10Y Diff Tighter
NZGBs closed 1-2bps richer across benchmarks, solidly outperforming US tsys on the day. The NZ-US 10-year yield differential finished 7bps tighter at +32bps. Today’s move, therefore, allowed the differential to hold the range it has traded in over the past 12 months.
- Notably, the NZGB market was closed at the time of today’s RBA decision. Accordingly, there may be some negative spillover from ACGBs given the sharp sell-off post the RBA’s 25bps rate hike.
- Swap rates closed 2-3bps lower.
- RBNZ-dated OIS pricing closed little changed across meetings. No tightening is priced for February, while December 2026 assigns 51bps.
- Tomorrow, the local calendar will see Q4 Employment data.
- On Thursday, the NZ Treasury plans to sell NZ$225mn of the 4.50% May-30 bond, NZ$175mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.
Bloomberg Finance LP
FOREX: USD - BBDXY dragged Below 1190 By The Bounce In The AUD
The BBDXY has had a range today of 1188.83 - 1191.78 in the Asia-Pac session; it is currently trading around 1189. Risk has had an impressive turnaround thanks to a very strong US ISM Man PMI. What's interesting about the USD price action is that recently this type of price action would have seen the USD give back most of its recent gains, but it continues to hold around 1190, the large bounce in the AUD is seeing it begin to pullback in Asia though. I suspect that bounces will continue to find sellers in the short-term as the USD still has few friends. On the day, the first resistance remains in the 1190-1195 area and then more importantly back towards 1200 where I suspect sellers would return in earnest.
- EUR/USD - Asian range 1.1787-1.1815, Asia is currently trading 1.1814. Price action has left an ugly bearish shadow on the weekly chart, but we are approaching levels that should start to see some buyers return. On the day, the support is between the 1.1760-1.1790 area initially a move through here would open up a deeper reversion back to the important 1.1700 area where I suspect buyers would again return. I suspect a bounce back toward the 1.1870-1.1910 area would find sellers first up as the pair looks to consolidate.
- GBP/USD - Asian range 1.3661-1.3691, Asia is currently dealing around 1.3691. The pair like everything else had an ugly weekly close leaving a clear rejection of the 1.3850 area. On the day, first support is 1.3600-1.3650 then the 1.3500 area.
- Cross asset : SPX +0.25%, Gold $4820, US 10-Year 4.28%, BBDXY 1189, Crude Oil $61.93
- Data/Events : Italy HCOB Italy New Car Registrations, Spain Unemployment Change, France CPI
Fig 1: GBP/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
