AUSSIE BONDS: Futures Down, 10yr Support At 4.10% Holds, RBA's Bullock Later
The early tone in Aussie bond futures is weaker, following the US lead from Thursday, as the oil price spike weighed on futures. 10yr (XM) is back to 95.83, off 3.5bps, leaving upside resistance at 95.90 intact for now. Downside support is likely at the early Sep lows at 95.51. 3yr futures (YM) are off by the same amount to 96.60. Cash ACGB yields are around 3-4bps firmer in the first part of trade, the 3yr back close to 3.39%, while the 10yr is at 4.155%.
- Note we have the RBA's Bullock speaking at 11:05 AEDT, (so in a little under 1.5hrs). It can be followed from this link. Given near even odds of a 25bps cut in Nov, her remarks will be watched closely for any policy hints, particularly in the aftermath of the recent jobs data, which saw the unemployment rate climb to 4.5%, fresh multi year highs.
- For the 3yr upside focus will rest on whether we can recapture the 3.40% handle, while the 200-day EMA resistance is at 3.52%. For the 10yr support around 4.10% has held. Key EMAs all rest above 4.20% though.
- The AU 3/10s curve is little changed at +77bps, while the AU-US 10yr spread is slightly off weekly highs, last +16bps.
- Preliminary PMIs for Oct, were mixed. Manufacturing slumped to 49.7, from 51.4 in Sep. Services improved though to 53.1 from 52.4 (leaving the composite index little changed at 52.6, versus 52.4 prior).
- These prints are unlikely to change broader macro thinking, with firm focus on next Wednesday's Q3 CPI print (outside of Bullock's remarks today). Markets look for headline to rebound to 2.9%y/y (from 2.1%), but trimmed mean to hold steady at 2.7%y/y.
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JPY: USD/JPY - No Direction, In The Middle Of The Range
The overnight range was 147.46 - 147.93, Asia is currently trading around 147.60. USD/JPY stalled above 148.00 and continues to chop around sideways without really going anywhere. The USD traded sideways with little clear direction overnight. The price is still in the middle of its recent 146-149 range, and we need a convincing break on either side to see some clearer direction again. Neither the FOMC nor the BOJ were able to provide any clarity, the market will start turning its focus towards payrolls which seems a lifetime away.
- MNI JAPAN: LDP Candidates Support New Parties In Coalition, No Signal Of Which Ones. Speaking at a joint press conference earlier today, all five candidates for the presidency of the governing Liberal Democratic Party (LDP) voiced their support for the prospect of expanding the governing coalition beyond the LDP and its long-term partner, the centrist social-conservative Komeito party.
- Bloomberg - “Japan’s Takaichi Says More Bond Issuance May Become Unavoidable. Japan will need to rely on excess tax revenue to fight back against rising consumer prices, but issuing government bonds “could become unavoidable if the situation calls for it,” said Sanae Takaichi, a frontrunner in the ruling Liberal Democratic Party’s leadership race.”
- Options : Close significant option expiries for NY cut, based on DTCC data: 145.00($1.52b), 148.50($728m). Upcoming Close Strikes : 145.00($1.09b Sept 26), 150.00($922m Sept 25) - BBG.
- CFTC data shows last week asset managers reduced their JPY longs slightly +71162( Last +87239), leveraged funds again used the dip to add to their short position believing the support will continue to hold -58811(Last -49951).
- Data/Event : S&P Global Japan PMI’s, Machine Tool Orders YoY
Fig 1 : USD/JPY Spot 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA: Government Bond Issuance Today
- Vietnam To Sell VND 9.0Tln 2035 Bonds; (TD2535028)
- Vietnam To Sell VND 3.0Tln 2040 Bonds; (TD2540037)
- Vietnam To Sell VND 1.0Tln 2030 Bonds; (TD2530010)
- Vietnam To Sell VND 0.5Tln 2055 Bonds; (TD2555052)
- Bank Indonesia to Sell 367D SUVBI Bills
- Bank Indonesia to Sell 31D SUVBI Bills
- Bank Indonesia to Sell 94D SUVBI Bills
- Bank Indonesia to Sell 181D SUVBI Bills
- Bank Indonesia to Sell 273D SUVBI Bills
- India to Sell INR60bn 182-Day Bills
- India to Sell INR100bn 91-Day Bills
- India to Sell INR50bn 364-Day Bills
ASIA: Coming Up in Asia
| 0300GMT | 1000HKT | 1200AEDT | South Korea Retail Sales YoY AUGUST |
| 0300GMT | 1000HKT | 1200AEDT | South Korea Department Store Sales YoY AUGUST |
| 0300GMT | 1000HKT | 1200AEDT | South Korea Discount Store Sales YoY AUGUST |
| 0430GMT | 1130HKT | 1330AEDT | Thailand Customs Exports YoY AUGUST |
| 0430GMT | 1130HKT | 1330AEDT | Thailand Customs Imports YoY AUGUST |
| 0430GMT | 1130HKT | 1330AEDT | Thailand Customs Trade Balance AUGUST |
| 0900GMT | 1600HKT | 1800AEDT | Taiwan Industrial Production YoY |
source: Bloomberg Finance LP / MNI
