AUSSIE BONDS: Cheaper, Risk-On After Nvidia's Results Beat
May-28 23:25
ACGBs (YM -3.0 & XM -3.0) are slightly weaker after a muted session for US tsys amid a lack of fresh catalysts. That said, US tsy futures have opened in today's Asia-Pac session weaker in response to risk on sentiment.
- Wall Street was confined to a narrow range, awaiting Nvidia earnings after the bell. Subsequently, Nvidia's results were better than expected, despite headwinds regarding chip curbs to China. Eminis and Nasdaq futures are stronger.
- Federal Reserve officials believe they can take their time in assessing the effects of fluid tariff policies, though they fear larger-than-expected tariffs will raise inflation and hurt employment, according to minutes of their May meeting released Wednesday.
- Cash ACGBs are flat to 2bps cheaper with the AU-US 10-year yield differential at -13bps.
- The bills strip is little changed.
- RBA-dated OIS pricing is slightly firmer across meetings today. A 25bp rate cut in July is given a 54% probability, with a cumulative 69bps of easing priced by year-end (based on an effective cash rate of 3.84%).
- Today, the local calendar will see Q1 Private Capital Expenditure data.
- The AOFM plans to sell A$1200mn of the 4.25% 21 March 2036 bond on Friday.
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BONDS: NZGBS: Little Changed, Us tsys Rally As Texas Manf Survey Slumps
Apr-28 23:07
In local morning trade, NZGBs are little changed despite US tsys finishing near session bests Monday, with 2- to 10-year yields 2-5bps.
- Underlying bid as Dallas Fed's Texas Manufacturing Survey for April -- the weakest since the start of the Covid pandemic in 2020, as tariff uncertainty weighed heavily on manufacturers in the district, while price pressures remained elevated.
- Meanwhile, the US Treasury's latest borrowing/financing requirements estimates were slightly higher - but broadly in line with - MNI's estimates: $514B for the Apr-Jun quarter, and $554B for the Jul-Sep quarter.
- Finance Minister Willis said in her Pre-Budget speech that NZ’s government is cutting new spending in this year's budget due to US tariffs threatening global growth and the country's fiscal recovery. The operating allowance for Budget 2025 will be cut to NZ$1.3 billion from NZ$2.4 billion to allow for a return to budget surplus in 2029.
- NZ filled jobs rose 0.2% m/m in March versus a revised 0% in February.
- Swap rates are 1-2bps lower.
- RBNZ dated OIS pricing shows 27bps of easing priced for May, with a cumulative 82bps by November 2025.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond, NZ$150mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.
MNI: UK APR BRC SHOP PRICES +0% M/M, -0.1% Y/Y
Apr-28 23:01
- MNI: UK APR BRC SHOP PRICES +0% M/M, -0.1% Y/Y
GOLD: Gold Jumps on Poor US Data
Apr-28 22:45
- Gold climbed into the US open to finish ahead having been lower for most part of the trading day.
- Gold finished higher by +0.73% at US$3,343.98, having been as low as $3,268.23 earlier in the day.
- As the USD continues to soften and bond yields rallied ahead of key US economic data on Wednesday, gold jumped as expectations for weaker data grew.
- Overnights’ data release, the Dallas Fed. Manufacturing Activity, fell to its lowest in 5 years with survey respondents showing executives describing the current situation as "chaos" as supply line disruptions decimate activity.
- This has reduced expectations for Wednesday’s data which sees employment , inflation and growth releases.
- Gold had started the week in the Asian trading session on the back foot, trending downwards before the Texas data which has refocused attention on the possibility that already the trade war may be showing up in US data.
