JGBS: Futures Avoid 130.00 Downside Test, PMI Revisions For March Due Later

Today's dual PMI data release serves as the final economic health check for China before the National People's Congress (NPC) convenes tomorrow.

• The official government data focuses on large, state-owned enterprises and is expected to show continued domestic struggles.
  Manufacturing Forecast: 49.2 (Previous: 49.3).
  Non-Manufacturing Forecast: 49.7 (Previous: 49.4).
  Forecasts expect the official print to remain in contraction (below 50), weighed down by a significant slowdown in the construction sector and weak domestic consumer demand.
• RatingDog (Caixin) PMI (Private Co's)
  The RatingDog (formerly Caixin) index surveys smaller, private, and export-oriented firms. It has recently outperformed the official data due to robust overseas demand.
  Manufacturing Forecast: 50.1 (Previous: 50.3).
  This index is expected to hover right on the neutral 50-mark. While new orders and exports have supported the sector, business sentiment recently hit a nine-month low due to rising input costs for metals and general economic uncertainty.
  
  Markets are watchging closely for output from the NPC this week.  A simultaneous miss on both figures would intensify pressure to announce a more expansionary fiscal stance at the NPC, including a potential 4.0–4.5% fiscal deficit target and monetary policy measures (RRR cuts currently favoured).
   

ACGBs (YM -4.0 & XM -2.0) are weaker after US tsys finished 2-3bps cheaper across benchmarks as markets continue to focus oil price & the US/Israel conflict with Iran. 

• Pres Trump posted on Truth Social: "Effective IMMEDIATELY, I have ordered the US Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf.
• Today, the local calendar will see Q4 GDP.
• MNI AU - Consensus for Q4 GDP growth in Australia sits at 0.8%q/q, and 2.3% y/y. The consensus forecast range for the q/q outcome sits at 0.5 to 1.2%. If the 0.8%q/q outcome is realised it would be the strongest rate of growth since the end 2022 (when growth was +0.9%q/q).
• Cash ACGBs are 2-4bps cheaper with the AU-US 10-year yield differential at +73bps.
• The bills strip is -2 to -5 across contracts, late whites leading.
• RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 40% for March to 114% by May and 203% by December 2026.  
• The AOFM plans to sell A$900mn of the 4.75% 21 October 2037 bond today and A$800mn of the 1.50% 21 June 2031 bond on Friday.

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NZGBs are 2-3bps weaker after US tsys finished 2-3bps cheaper across benchmarks as markets continue to focus oil price & the US/Israel conflict with Iran. 

• Trump says the Iran operation is "going well," claiming that Iran's air force, navy, and air detection have all been "knocked out." Later adds, "their missile count is going way down." Trump appeared to walk back on Secretary of State Marco Rubio's suggestion that an imminent Israeli attack on Iran compelled the US to strike the country. "If anything, I might have forced Israel's hand," Trump says.
• Risk sentiment got a small jolt after Reuters headline reported that the US is "considering oil tanker insurance support to ease Mideast crude shipments".
• Bloomberg - "Average price for whole milk powder rose to $3,863 from $3,706 at the previous auction, according to the GlobalDairyTrade website."
• NZ Terms of trade rose 3.7% q/q (estimate -0.3%) in Q4.
• The local calendar will also see ANZ Commodity Price data today.
• Swap rates are 4bps higher.
• RBNZ-dated OIS pricing is little changed across meetings. No tightening is priced for April, while December 2026 assigns 34bps.
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 1.50% May-31 bond and NZ$200mn of the 4.5% May-35 bond.

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