AUSSIE BONDS: Cheaper Despite CPI Beat
Mar-26 04:34
ACGBs (YM -4.0 & XM -4.0) are weaker and sit in the middle of today’s of today’s ranges.
- February headline CPI rose 0.1% m/m to be up 2.4% y/y down from January’s 2.5%.
- Given it continues to be impacted by various state and federal electricity rebates, the focus is on the underlying trimmed mean which moderated 0.1pp to 2.7% y/y and has been under 3% now for three straight months.
- Q1 data is released on April 30 and the RBA is forecasting core at 2.7%, in line with the monthly data and below the target band’s ceiling, which will be the first time since Q4 2021. The outcome will be a key input into the May 20 RBA decision.
- Cash US tsys are ~2bps cheaper in today's Asia-Pac session after yesterday's modest gains
- Cash ACGBs are 3-4bps cheaper with the AU-US 10-year yield differential at +13bps.
- Swap rates are 3bps higher.
- The bills strip contracts are -2 to -5, with a steepening bias.
- RBA-dated OIS pricing is flat to 5bps firmer across meetings today. A 25bp rate cut in April is given a 4% probability, with a cumulative 64bps of easing priced by year-end.
- The local calendar will be empty for the remainder of the week.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
GOLD: Gold’s Fortunes Fluctuate in Asia Trading Day.
Feb-24 04:28
- Gold sold off in early trading in Asia today, before staging a comeback.
- Opening at US$2,935.45, gold sold off to a low of $2,921.48 before rebounding back above opening levels to be at $2,941.95.
- Year to date Gold is up over 10% in 2025, delivering positive returns in every trading week of the year.
- The much-mooted revaluation of US Gold reserves touted by the US President’s team could actually be good for prices, according to BofA Head of Commodities Research (per BBG).
- In a further bullish sign for gold yet another Central Bank has increased their gold purchases with data from Iran showing imports of 100 tonnes during their financial year, up from 30 tonnes prior (according IRNA).
CHINA: China's 10YR Bond Future Down for Third Day.
Feb-24 03:55
- China’s main bond futures headed in different directions at the start of the week.
- China’s 10YR bond future is down -.18 at 108.075, marking the third trading day in a row of declines.
- The move lower sees the 10YR future inching towards the 100-day EMA of 108.02, with the 50-day EMA being dragged lower at 108.61.
- The 2YR bond future is up +0.05 today at 102.62, below all major technical levels.
- Cash market is weaker today also with government bonds up to 1bp higher in yield across most maturities.
- Equity markets too are down today with key bourses down by -0.10% to -0.50%
- This week sees the decision on the 1-year Medium Term Lending Facilities with market expectations for now change at 2.00%, but with an increase in volume from CNY200bn to 300bn
BONDS: NZGBS: Closed Mid-Range With A Bull Flattener
Feb-24 03:45
NZGBs closed showing a bull-flattener, with benchmark yields 2-5bps lower. Nevertheless, NZGBs finished mid-range, with the 10-year underperforming its Australian counterpart.
- The AU-NZ 10-year differential finished at -9bps compared to the recent high of +10bps in early November, which marked the highest level since August 2022. However, a simple regression analysis of the AU-NZ 10-year yield differential against the AU-NZ 1Y3M spread over the past 18 months shows that the 10-year differential is around 14bps above fair value based on the regression model.
- NZ Q4 2024 retail sales (ex inflation) were stronger than forecast, rising 0.9% q/q, against a 0.5% market expectation. This was the firmest q/q print since the end of 2021. This shows the impact of RBNZ easing beginning to benefit parts of consumer spending.
- Swap rates closed 3-6bps lower, with the 2s10s curve flatter.
- RBNZ dated OIS pricing closed little changed out to August but 3-5bps firmer beyond. 27 bps of easing is priced for April, with a cumulative 58 bps by November 2025.
- Tomorrow, the local calendar is empty.
- On Thursday, the NZ Treasury plans to sell NZ$225mn of the 3.00% Apr-29 bond, NZ$225mn of the 3.50% Apr-33 bond and NZ$50mn of the 1.75% May-41 bond.
