EM ASIA CREDIT: China Real Estate: NWD gets refi done

The ESM5 Overnight range was 5868.25 - 5941.75, Asia is currently trading around 5935. A strong night for US stocks across the board, tailwinds were provided by a rebound in consumer confidence and a surge in bonds. “Tuesday's stock rally has the hallmarks of a short-cover and systematic-led rally. With computer-generated accounts skewed to buy equities over the coming week, that’s particularly true in Nasdaq futures, where even a flat tape will force CTA’s to buy +10% of their max size as algos accumulate their largest position size.”(BBG)

• “Nvidia’s earnings later today could serve as a barometer, with the world’s most valuable chipmaker expected to post another quarter of strong growth. Revenue from its core chip business is forecast to rise over the next four quarters, and options pricing implies a post-earnings move of more than 7%, according to data curated by Bloomberg.”(BBG)
• Bloomberg - “Yet not all is rosy under the surface. Bank of America analyst Vivek Arya sees potential cracks forming beneath the headline numbers. "We look for modest Q1 beat vs. the $43 billion guide and $43.4 consensus," Arya said in a recent note.
• "Yet, the expert warned that Nvidia’s gross margins could fall sharply due to a $5.5 billion inventory write-off tied to U.S. government restrictions on high-end H20 chips sold to China. That could drag gross margins from the guided 71% to just 58%, pushing pro forma EPS closer to $0.74, nearly 16% below consensus.”
• Stocks trade like a beachball being held under water, the move looks overdone but momentum type funds and share buybacks have kept the market well supported.
• In the short-term stocks continue to look overbought but dips are expected to be met with demand, the first buy-zone is back towards the 5600/5700 area.

TYM5 is trading 110-13+, down 0-03 from its close.

• The US 2-year yield opens around 3.957%, down 0.02 from its close.
• The US 10-year yield opens around 4.445%, unchanged from its close
• In supply, the 2Y Note was well digested (1bp trade-through was the best since February), helping consolidate Treasury gains through the afternoon session.
• “Sale of $69 billion 2-year notes was solid, trading 1bp through the WI yield with bidding statistics broadly solid, the $70 billion 5-year sale tomorrow will be a sterner test of the Street’s demand.”(BBG)
• “The US Treasury cut the size of its four- and eight-week bill auctions for the first time since February.”(BBG)
• The 10-year looks likely to see supply on any dips in yield in the short-term, should yields hold above 4.35/40% the target looks to be the 4.75% area. Watch for any announcements relating to the SLR, this could have an impact on a market that is already quite short.
• Data/Events: Wednesday's calendar includes more regional Fed surveys (Richmond services/manufacturing, Dallas services) and an appearance by FOMC's Kashkari, with supply including 2Y FRN and 5Y Note. We then get the minutes of the May FOMC meeting in the afternoon.

The deterioration in the labour market appears to have stabilised but a recovery is yet to begin. Filled jobs in April fell 0.1% m/m to be down 1.7% y/y after a 0.1% m/m rise in March but it was also down 1.7% y/y. Vacancies are off their 2024 lows but remain depressed despite rising in March & April. The RBNZ is widely expected to cut rates 25bp today but the focus will be on the updated OCR trajectory and if it signals a possibility of policy going stimulatory.

• Primary industries saw a 0.1% m/m rise in filled jobs, a sector that has seen strong external demand lately. However, goods-producing sectors fell 0.3% m/m and services -0.1% m/m.
• In annual terms, construction jobs are down 6.5% y/y and admin services -6.7% y/y. Retail is down 1.5% y/y.
• Young people have felt the brunt of labour shedding with filled jobs for 15-19 year olds down 10% y/y and 20-24 years -3.9% y/y.
• April SEEK job ads rose 1.1% m/m but are still down 9.6% y/y. 3-month momentum though has been positive this year. Labour supply remains robust with applicants per job ad up 17.5% y/y but the ratio down 3.1% m/m in March, the sharpest monthly drop in over 2 years as migration eases.

NZ job ads vs filled jobs