LNG: Cold Winter Outlook Drives US Gas Up, Milder Europe Keeps It In Range

The BNZ services and manufacturing PMIs for September were consistent with the RBNZ’s assessment in its October statement that “economic activity recovered modestly in the September quarter”. The manufacturing sector stagnated in August/September, while services continued to contract but at a slower rate with September up one point to 48.8, highest since March. Continued weak activity, including employment, at the end of the quarter is consistent with further RBNZ easing with policy likely to become stimulatory.

• The Q3 averages of the PMI and PSI show that there was some improvement in the quarter compared to Q2. Manufacturing rose 1 point to 50.9, slight growth, and services almost 3 points to 47.7, ongoing contraction.
• Forward-looking services orders rose to 51.4 from 47.8, the highest since November 2024. They continued to contract in Q3 overall at 48.6 but at a slower pace than Q2’s 45.5. Manufacturing saw an increase in orders in Q3 at 53.1 up from 49.5.
• Labour demand remained soft consistent with other data signaling a weak Q3 print on 5 November. September services employment fell to 47.8 from 48.7 with Q3 showing a further contraction in staffing at 47.6 (Q2 46.4). Manufacturing employment contracted too in the quarter.

NZ BNZ services vs manufacturing indices

Source: MNI - Market News/LSEG

• RES 3: 140.08 High Jun 13  
• RES 2: 139.05 High Aug 4 
• RES 1: 137.30 - High Sep 8 and key short-term resistance
• PRICE: 136.03 @ 15:44 BST Oct 10
• SUP 1: 135.61 - Low Oct 08 
• SUP 2: 135.39 - 1.618 proj of the Aug 4 - Sep 2 - Sep 8 swing (cont.)
• SUP 3: 134.69 - 2.000 proj of the Aug 4 - Sep 2 - Sep 8 swing (cont.)  

A bear threat in JGB futures remains present despite the intraday spike Monday. The contract pulled well off the intraday high, keeping the bias negative for now. The latest sell-off has also resulted in a break of support at 136.19, the Sep 4 low and a bear trigger. Clearance of this level confirms a resumption of the downtrend and opens 135.39 next, a Fibonacci projection. Key short-term resistance has been defined at 137.30, the Sep 8 high.  

Aussie bond futures surged at the open, as from late Friday we saw a sharp risk off move in the US. Trump's tariff threat against China drove safe have demand for US Tsys. For Aussie 3yr and 10yr futures, key short term resistance remains intact though. 

• We sit away from best levels for Aussie futures, as softer language used by US officials today and by Trump this morning suggest scope for negotiations with China. US Tsys futures are down so far today, the 10yr off 5bps to 112-31.
• For 3yr futures in Australia we got to 96.495 earlier today, but now sit at 96.475, +7.5bps, while 10yr futures sit at 95.68, +6.5bps (earlier highs were at 95.7050). Near-term resistance to watch is 95.780, the Sep 12 high, while the 3yr future short-term resistance to watch is 96.615, the Sep 12 high.
• ACGB yields are around 6.5-7.5bps lower across the benchmarks, led slightly by the front end. The 3-10s curve was last around +80bps, holding within recent ranges.
• The AU-US 10yr spread is still threatening to break highs, last +26bps. A clean break above +30bps could see +40-45bps targeted for the spread, levels last seen in 2022. If US-China tensions don't de-escalate this spread may mean revert though, as Australian easing expectations could firm again if tariffs threaten the China growth outlook.
• The local data calendar is empty until tomorrow's Sep NAB business survey, along with the RBA policy minutes.