AUSSIE 10-YEAR TECHS: (H6) Found Bottom?

In post-Tokyo trade, JGB futures closed stronger, +9 compared to settlement levels, after US tsys 

• Heavy corporate debt issuance (second highest on record at $57.85B) spurred several rounds of rate lock and speculative selling in the first half, TYH6 falling to 112-06.5 low in early trade.
• US tsys ratcheted richer after this morning's headline PMI reading was a little weaker than the consensus of analysts had anticipated at 47.9 (48.4 expected, 48.2 prior), though MNI had signaled that some deterioration should be unsurprising given poor regional Fed surveys and a dip in the S&P PMI for the month.
• Stocks finished stronger despite the spike in geo-political risk following US capture of Venezuela's Maduro over the weekend. Energy and Financial sector shares continue to lead advances.
• Look ahead: focus remains on US employment data this week: ADP on Wednesday, Nonfarm payrolls for December on Friday.
• BoJ Governor Ueda reiterated the central bank's tightening bias yesterday. Market pricing, per OIS markets, is quite flat for the next two policy meetings though.
• Today, the local calendar will see Monetary Base data alongside 10-year supply.

Source: Bloomberg Finance LP

US futures are higher across all maturities as both ISM Manufacturing and ISM Prices paid were weaker than expected.  The US 10-Yr finished up +07+ at 112-13+ with a lot of hedging activity, given the size of corporate issuance.  TYH6 is nearing its topside resistance in the 100-day EMA at 112-14+.  TYH6 has opened the trading day in Asia at 112-12+, marginally lower on light volumes.  

• The 2-Yr fell -2.3bps to 3.453%
• The 5-Yr fell -3.8bps to 3.706%
• The 10-Yr fell -2.9bps to 4.163%
• The 30-yr fell -2bps to 4.851%

Issuance overnight was focused on US$86bn 13-week bills and US$77bn 26-week bills with both auctions seeing moderate declines in the bid to cover.  

• The Atlanta Fed's GDPNow estimate for Q4 2025 has been marked down to 2.7% Q/Q SAAR (2.68% unrounded) from 3.0% in its prior update on Dec 23 (2.97% unrounded) and 4.3% in Q3.  The major data development between then and now was today's relatively soft ISM Manufacturing index, which saw the growth forecast for equipment investment downgraded to -3.2% Q/Q SAAR from -2.4% (and +5.4% in Q3), while personal consumption expenditures were downgraded to 2.4% from 2.7% (3.5% in Q3).
• U.S. manufacturing activity will remain under pressure in early 2026 as the ISM index recorded a third consecutive decline in December and has spent the prior ten months in contraction, Institute for Supply Management manufacturing chair Susan Spence told MNI. https://www.mnimarkets.com/articles/mni-interview-manufacturing-to-continue-to-soften-ism-chief-1767638055526
• Today's Corporate issuance was the second largest on record: surpassing $50.95B (from record 28 companies) in debt on Tuesday, September 2, '25, with largest single day issuance of $59.55B on Monday January 6, '25 from 25 companies & supra sovereigns.
• Projected rate cut pricing has consolidated vs. early Monday morning levels for the US trading day (*): Jan'26 steady at -4bp (-4.6bp), Mar'26 at -13.9bp (-14.5bp), Apr'26 at -19.5bp (-20.6bp), Jun'26 at -34.3bp (-35.3bp).

• RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
• RES 2: 96.780 - High Jun 26 (cont)
• RES 1: 96.700 - High Sep 12 
• PRICE: 95.790 @ 16:47 GMT Jan 5
• SUP 1: 95.740 - Low Dec 22
• SUP 2: 95.480 - Low 1st Nov ‘23
• SUP 3: 94.932 - 1.0% 10-dma envelope

Prices printed fresh pullback lows just before the end of 2025, prompting the active contract to take out notable support into 95.760. The slower pricing for additional RBA easing - and partial pricing for a return to rate hikes next year - should keep the front-end of the curve under pressure. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 95.480 as the next major support.