AUSSIE BONDS: Cheaper But Better Than Worst Levels, Jobs Report Tomorrow

NZGBs closed showing a twist-flattener, with benchmark yields 4bps higher to 3bps lower. Nevertheless, all NZGB yields closed well off session highs after weaker-than-expected card spending data. 

• Cash US tsys also assisted the move away from session yield highs. Cash US tsys are 2-3bps richer, with a steepening bias, in today's Asia-Pac session after Friday's heavy session.
• Last week, the US 10-year yield rose almost 50bps in 5 days, one of the biggest moves in that number of days since 1998. The US calendar is light this week, with the highlights being Retail Sales data and Fedspeak from Powell and Waller on Wednesday.
• Swaps closed mixed, with rates 3bps higher to 1bp lower. The 2s10s curve closed flatter.
• RBNZ dated OIS pricing closed 1-6bps firmer across meetings. 31ps of easing is priced for May, with a cumulative 79bps by November 2025.
• Tomorrow, the local calendar will see Food Prices and a speech from the RBNZ’s Chief Economist About Forecasting.
• On Thursday, the NZ Treasury plans to sell NZ$275mn of the 3.00% Apr-29 bond and NZ$225mn of the 4.25% May-36 bond.

• Gold opened the week at US$3,237.61, a new high and rallied into the Asian trading morning to reach another new high of $3,245.75, before backing off to $3,230.70
• Goldman Sachs has raised it year end price target to $3,700, but warned in an extreme risk case, it could reach $4,500.
• Australia’s Northern Star Resources attempt to purchase the smaller De Grey Mining got a huge boost when Gold Road Resources (which owns 17% of De Grey) agreed to support the takeover (source  BBG).
• Vietnam has discovered 12 new gold mines in the central region, containing more than 10 tonnes of gold and 16 tonnes of silver, following extensive geological surveys, the Mid-Central Geological Division said, VNExpress reported. (source BBG)

USD/CNH is holding above 7.3100 at this stage, close to session highs of 7.3173. We are around 0.30% weaker in CNH terms, while spot USD/CNY has pushed back above 7.3000 so far today. We continue to see meaningful divergence broader USD index trends. The BBDXY index is up from earlier lows though (from sub 1230, to be back near 1232). 

• The USD/CNY fixing pushing up to multi year highs above 7.2100 suggests further gradual depreciation pressures in the yuan. The chart below shows the fixing and broader USD BBDXY breakdown.
• The authorities are likely to remain comfortable with further CNY basket weakness, as lower levels will help ease financial conditions. We had trade figures earlier, which showed higher than expected export growth, but significant uncertainties remain over the overlook given higher US tariff levels.
• CNH/JPY is up slightly from recent lows, last near 19.56, on Friday the pair dipped to 19.43. EUR/CNH was near 8.3200 in latest dealings, with recent highs near the 8.4000 level.
• China is likely to watch how Japan negotiations on trade unfold. Currency discussions may also feature, which has been hinted at by Japan officials.
• There still appears some distance between the US and China sides though. Market sentiment was buoyed by the late Friday news around tariff exemptions for key electronic products, but US President Trump said the whole electronics sector would still be subject to national security tariff related probe. 

Fig 1: USD/CNY Fixing & USD BBDXY  

Source: MNI - Market News/Bloomberg