AUSSIE BONDS: Cheaper With US Tsys Ahead Of US Payrollls

Risk appetite is firmer post headlines of US-China officials to meet this week to discuss trade issues. 

• From our policy team: US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will meet with China's "lead representative on economic matters" later this week in Switzerland, according to statements released Tuesday.
• Further headlines have crossed from Bessent stating they will meet with China officials this Saturday and Sunday
• US equity futures have firmed, Eminis up by around 0.70%, while Nasdaq futures are +1.00% higher. For Eminis we are still sub recent highs of 5725, last near 5665.
• In the FX space, yen is off around 0.55%, last near 143.25/30, while USD/CHF is up by a similar amount, tracking to 0.8260. AUD and NZD are outperforming, more so the AUD, which was last 0.6510/15. NZD/USD is close to 0.6015, just off session highs at 0.6022. NZD did rise as well on NZ jobs figures, which showed a slightly lower than expected jobless rate, but follow through is limited. USD/CNH is back close to 7.1950, up around 0.20% in CNH terms.
• In commodities, gold is off 1.5%, but remains elevated near $3400.
• Oil is 0.65% firmer for WTI, building on yesterday's +3.4% rise. 

In local morning trade, NZGBs are 1bp richer, and little has changed since the release of the Q1 Employment Report. 

• NZ’s jobless rate unexpectedly held steady in the first quarter as fewer people sought work in a sluggish economy. While employment rose 0.1% q/q as expected, the unemployment rate was lower than consensus, holding steady at 5.1%. Private wages slowed to 0.4% q/q, which was less than forecast. The participation rate fell 0.1pp to 70.8%.
• US tsys ended mostly richer overnight, reacting to a strong 10-Year note auction. The move was generally across the board.
• Final March trade data confirmed a new record (nominal) deficit and the largest on a relative basis since 2005/06 in the imbalances ahead of the Great Financial Crisis. However, pharmaceutical tariff front-running and continued heavy imports of gold are greatly clouding the interpretation of underlying trends.
• Swap rates are 2-3bps higher, with implied swap spreads wider.
• RBNZ dated OIS pricing is little changed across meetings. 26bps of easing is priced for May, with a cumulative 76bps by November 2025.
• On Thursday, the NZ Treasury plans to sell NZ$225mn of the 3.00% Apr-29 bond, NZ$175mn of the 4.25% May-36 bond and NZ$50mn of the 2.75% May-51 bond.

Headlines have crossed that US and China officials will meet this week to discuss trade. 

• From our policy team: US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will meet with China's "lead representative on economic matters" later this week in Switzerland, according to statements released Tuesday.
• "While in Switzerland, Secretary Bessent will also meet with the lead representative on economic matters from the People's Republic of China," the statement from the Treasury Department said. Greer "will also meet with his counterpart from the People's Republic of China to discuss trade matters" while in Geneva, his office said.
• From the China side: "*CHINA DECIDES TO TALK TO US AFTER GLOBAL, CHINA INTEREST" - BBG,"*CHINA SAYS ANY TALKS HAVE TO BE EQUAL, BENEFIT EACH OTHER" - BBG, "*CHINA SAYS WON'T SACRIFICE ITS PRINCIPLES TO SEEK AGREEMENT" - BBG.
• Markets are reacting positively, with a risk on tone in the FX space. JPY and CHF are both off around 0.45-0.50%, with USD/JPY back above 143.00. AUD and NZD are holding up, while USD/CNH is back under 7.1900. US equity futures have risen, SPX last +0.80%.