METALS: Copper - HGU5 Probing Above 500.00

ACGBs (YM +3.0 & XM +5.0) are stronger with US tsys 1-3bps richer in today’s Asia-Pac session after yesterday’s holiday.

• Cash ACGBs are 3-5bps richer with the AU-US 10-year yield differential at -16bps.
• The bills strip richer, with pricing +1 to +3.
• RBA-dated OIS pricing is showing a 25bp rate cut in July as a 73% probability, with a cumulative 75bps of easing priced by year-end (based on an effective cash rate of 3.84%).
• Today, the local calendar has been light. The ANZ-Roy Morgan Consumer Confidence Index fell to 87 in the week of May 19 to May 25 from 88.8 in the prior week.
• The focus remains on tomorrow’s April CPI, which is forecast to moderate to 2.3% y/y from 2.4%. The trimmed mean has been around 2.7% y/y for four consecutive months. There will be limited updates to the services components being the first month of the quarter.
• Some of the components of Q1 GDP are also released this week, namely construction (Wed) and private capex (Thu).
• April retail sales print on Friday and are projected to rise 0.3% m/m after increasing the same amount in March.

• China bond futures are marginally lower today, following the injection of liquidity during the OMO.  
• The 10YR future is down -0.05 at 108.80 having bounced off the 20-day EMA of 108.84.  
• The 50-day EMA sits below at 108.73.
• The 2YR future is down -0.02 at 102.40 and remains below all major moving averages.  The nearest being the 20-day EMA of 102.46.
• The 10YR CGB is higher by +0.05bp today at 1.69%
• Industrial Profits for April were released today and continue to trend in the right direction, improving on March.   
• Next key data will be Official PMIs on the 31st.   

RBNZ-dated OIS pricing was little changed across meetings today.

• Markets continue to price in 25bps of easing for tomorrow’s meeting, with 64bps expected by November 2025.
• However, rates remain 2–19bps higher than levels observed prior to the Q1 CPI release on April 17.
• Amid firmer NZ rates and softer Australian rates—following last week’s dovish RBA pivot and rate cut—the expected year-end policy rate differential between Australia and New Zealand has narrowed by 20–25bps over the past week, currently standing at +22bps. 

Figure 1: RBNZ Official Rate Profile Vs. Expected Dec-25 Level

Source: MNI - Market News / Bloomberg