AUSTRALIA DATA: Exports & Confidence Impacted By Protectionism

In today's Asia-Pac session, TYM5 is 110-30, -0-04+ from closing levels.

• Current levels remain well within technicals: resistance above 111-25 (High Mar 11), initial support below 110-19 (20-day EMA), according to MNI's technicals team.
• Cash US tsys are 2-3bps cheaper across benchmarks in today’s Asia-Pac session after Friday’s uneventful end to the trading week.
• US stock-index futures climbed in early Asia trading on signs that the next round of President Donald Trump's trade tariffs could be more measured than previously suggested.
• Monday's focus will be on S&P flash PMIs alongside more Fed speakers including Atlanta Fed Bostic on Bbg TV and Fed Gov Barr on small business lending late in the afternoon.
• This week also brings the last US Treasury coupon auctions of the month, with a combined $183 billion of new two-, five- and seven-year notes.

The S&P Global preliminary March composite PMI showed that growth in activity picked up at the end of Q1 with the index rising to 51.3 from 50.6 in February and 51.1 in January. The Q1 average at 51.0 is higher than Q4’s 50.2, suggesting a moderate improvement in growth in the quarter from Q4’s 0.6% q/q. Both services and manufacturing were higher.

• Cost pressures rose in both services and manufacturing, with the index back above its average and its highest in seven months, according to S&P Global. The increase was due to higher wage, transport, material costs plus the effect of the softer AUD. This is weighing on firms’ margins with selling price inflation easing in March to the lowest in 4 months.
• Business confidence fell to a 6-month low due to heightened uncertainty, especially from global trade developments, and increased competition.
• New domestic business supported manufacturing and services activity, while export orders contracted marginally. Respondents said that improving economic conditions and business development were behind the domestic pick up, but higher costs, weather and difficult global environment were behind continued soft external demand.
• Improved demand helped to drive increased hiring, with employment growth rising at its fastest in almost three years. Services growth was particularly robust. This suggests that the drop in jobs in February was likely due to special factors. The ABS said there was an increase in the number of retirees.
• The services PMI improved moderately to 51.2 in March from 50.8 leaving Q1 at 51.1 after 50.8 in Q4.
• Manufacturing showed its strongest growth since October 2022 with the PMI up to 52.6 from 50.4. It has trended higher over the quarter and the Q1 average is 51.1 after 48.2 in Q4, which signalled a contraction.
• See S&P Global report here.

Australia S&P Global services PMI vs GDP q/q%

Today's result has continued the trend of firm pricing for ACGB auctions, as the weighted average yield printed 0.14bps through prevailing mids (per Yieldbroker). However, the cover ratio was 2.7067x versus 3.6500x previously.

• The outright yield was around the same level as the previous auction level but around 15bps lower than the January high.
• The 3/10 yield curve had steepened around 5bps since the last auction and hovered near its steepest level since mid-2022.
• Demand for duration was likely supported by the improvement in sentiment toward longer-dated global bonds since mid-January.
• The ACGB Jun-54 cash trade is slightly cheaper in post-auction dealings.