AUSSIE BONDS: Data-Light Session, YM Biased Lower, AU-US 10YY Near Top Of Range

Gold reached a new record of $3600.16/oz on Friday following disappointing August US payrolls data. It has been unable to return to that level during Monday’s APAC session but has range traded between $3579.73 and $3597.26 and is currently down 0.1% to $3583.5 as the US dollar is marginally stronger and yields slightly higher. Non-interest bearing bullion has found support this month from growing Fed easing expectations. 

• Fed independence remains in focus too with markets awaiting the legal ruling on whether President Trump can remove Governor Cook.
• Silver is underperforming falling 0.9% today to $40.64 after a low of $40.532. It spiked to $41.066 early in the session.
• Equities are generally stronger today with the S&P e-mini up 0.1%, Nikkei +1.3% and Hang Seng +0.4% but the CSI 300 is flat. Oil prices are higher with WTI +1.2% to $62.60/bbl. Copper is up 0.1%.
• Later August NY Fed 1-yr inflation expectations, July US consumer credit and German July trade & IP print. The focus of the week will be on Tuesday’s US payroll benchmark revisions, Wednesday’s August PPI and Thursday’s August CPI.

The AUD/USD has had a range of 0.6546 - 0.6568 in the Asia- Pac session, it is currently trading around 0.6560, +0.05%. The AUD tried to move higher initially on NFP but momentum failed and it spent the rest of the N/Y session trading heavy and drifting lower. The AUD remains in the middle of its recent multi-month range of 0.6350-0.6650 with little clear long-term direction for now.

• Tuesday sees September Westpac consumer confidence which rose each of the four months to August helped by lower rates and the prospects of further RBA easing. At 98.5 last month, it is now approaching the neutral 100-level. The NAB August business survey is also out on Tuesday. Business confidence has been trending higher since March and is positive again. Conditions however remain soft, although June/July printed above the 2025 average. Employment and cost/price components will be monitored closely.
• MNI INTERVIEW: Fed To Cut Faster After Weaker Jobs - William English. "There's no doubt the labor market report was soft, and that causes them to lean in the direction of easier policy," he said in an interview Friday. "It leans in the direction of easing policy further, faster than maybe the Fed had been inclined to."
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6475(AUD596m), 0.6500(AUD531m), 0.6625(AUD445m). Upcoming Close Strikes : 0.6650(AUD597m Sept 11) - BBG
• CFTC Data last week shows Asset managers reduced their shorts for the first time in a while -66025(Last -78758), the Leveraged community though look to be rebuilding their own shorts after winding them down -11860(Last -6447).
• AUD/JPY - Asia-Pac range 96.95 - 97.33, Asia is trading around 97.20.The pair looked to have topped out again after NFP, but this morning’s Ishiba news has thrown a spanner in the works. A sustained break above 97.50/98.00 is needed to reignite the upward trend.

Fig 1: AUD CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P

The TYZ5 range has been 113-07+ to 113-14 during the Asia-Pacific session. It last changed hands at 113-08+, down 0-04 from the previous close. 

• The US 2-year yield has edged higher trading around 3.526%, up 0.02 from its close.
• The US 10-year yield has edged lower trading around 4.099%, up 0.02 from its close.
• 10-Year Yields have broken through its support as the market reacts to a labour market that is rapidly cooling. This move should now see buyers return on bounces with the first buy-zone back towards 4.20%. First target the 4.00% zone then the 3.80% area.
• Zerohedge on X: “Morgan Stanley: We now expect quarterly rate cuts beginning in September for a terminal target range of 2.75-3.0% by end-2026.”
• (Bloomberg) - “Standard Chartered Sees Half-Point Fed Rate Cut This Month. Standard Charterer’s strategists see more aggressive easing, changing their previous call for a 25bp Fed interest-rate cut, following a weaker-than-expected payroll report Friday. “We think the August labor-market data has opened the door to a ‘catch-up’ 50bps rate cut at the September FOMC meeting, just as it did this time last year,” strategists John Davies and Steve Englander, write in a note.”
• Holger Zschaepitz on X: "The real surprise came in the revisions: BLS revealed that the US economy lost 13k jobs in June, marking the first monthly decline in employment since Dec2020. That also means the 53mth streak of continuous job growth ended in May; a major turning point for the US labor market.”
• Bob Elliott on X: “Labor market weakening needed to get the cuts so many want also means that  growth is far weaker than what's currently priced in.”
• Data/Events: NY Fed 1-Yr Inflation Expectations, Consumer Credit

Fig 1: 10-Year US Yield Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P