AUSSIE BONDS: Flat, Subdued Data-Light Session, Jun-31 Supply Tomorrow
Jan-23 03:52
ACGBs (YM flat & XM -0.5) are little changed after a subdued session of trading.
- The local calendar has been empty today.
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s modest losses.
- Cash ACGBs are flat to 1bp cheaper with the AU-US 10-year yield differential at -14bps.
- Swap rates are 1bp higher.
- The bills strip is -1 to -2 across contracts.
- Given the very high correlations between NZ and Australian CPIs and their major components, there is information to be gained about the upcoming Q4 Australian data on January 29 from NZ’s Q4 data.
- Given government electricity subsidies, it is difficult to compare the headline measures. However, the NZ data suggest there will be a further moderation in Australia’s trimmed mean inflation but possible upside risks to services, which is a particular focus of the RBA.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut is more than fully priced for April (110%), with the probability of a February cut at 71% (based on an effective cash rate of 4.34%).
- Tomorrow, the local calendar will see S&P Global PMI(P) for January.
- The AOFM plans to sell A$700mn of the 1.50% 21 June 2031 bond tomorrow.
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FOREX: USD Modestly Higher, Yen Pares Losses Post FinMin Warning
Dec-24 01:35
Early G10 FX trends are skewed towards the USD, albeit with modest moves overall. AUD and NZD are seeing some slight underperformance (which followed some outperformance on Monday). Rhetoric around FX moves has crossed from the Japan FinMin as well.
- The reaction so far from USD/JPY has been limited. We were last 157.15/20, close to unchanged for the session. Earlier highs were at 157.39.
- Japan FinMin Kato reiterated recent concerns on FX - "JAPAN FINMIN KATO: CONCERNED ABOUT RECENT FX MOVES, RTRS" "JAPAN FINMIN KATO: RECENTLY SEEING ONE-SIDED, SHARP FX MOVES" and that the authorities will take action against excessive moves.
- USD/JPY is still sub post BoJ highs (157.93), with these comments highlighting intervention risks as we approach the holiday period. Earlier the BoJ minutes from the Oct policy meeting came and went with little market reaction.
- AUD/USD sits down around 0.20%, last near 0.6235/40. Downside focus will rest on the 0.6199 low seen recently. The RBA minutes from the Dec meeting were out earlier. Upside risks to inflation have diminished but it was still too soon to be confident that inflation is sustainably at target.
- NZD/USD is also lower, last near 0.5635/40. Also, still up from recent cycle lows.
- Trends are biased in favour of the USD elsewhere, but aggregate moves are modest. In the cross asset space, US equity futures are down a touch, along with US yields, but again overall moves are modest.
- There is little in the way of further risk events for the remainder of today's Asia Pac session.
CHINA: Central Bank Drains Liquidity via OMO.
Dec-24 01:27
- PBOC issues CNY64.1bn of 7-day reverse repo.
- Today’s maturities CNY355.4bn
- Net Liquidity withdrawal CNY291.3bn.
- The PBOC controls liquidity in the interbank market through the daily issuance of reverse repo.
MNI: CHINA PBOC CONDUCTS CNY64.1 BLN VIA 7-DAY REVERSE REPOS TUES
Dec-24 01:24
- CHINA PBOC CONDUCTS CNY64.1 BLN VIA 7-DAY REVERSE REPOS TUES
