AUSSIE BONDS: Holding Post-Jobs Gains, Nov-31 Supply Tomorrow
ACGBs (YM +8.0 & XM +5.0) are holding +4-7bps after a weaker-than-expected June Employment Report.
- The Australian June jobs report was below market expectations. Jobs growth was just +2k, versus +20k forecast, after a revised -1.1k fall in May (originally reported as a -2.5k fall). The unemployment rate rose to 4.3% against a 4.1% forecast and 4.1% May outcome.
- (AFR) But it’s the momentum in the jobs market that should worry Bullock and the RBA board. The underemployment rate rose from 5.9 per cent to 6.0 per cent. The underutilisation rate jumped from 10.1 per cent to 10.3 per cent. And hours worked dropped by 0.9 per cent month-on-month in June. (via BBG)
- Cash ACGBs are 5-8bps richer on the day, 3-6bps richer post-data, with the AU-US 10-year yield differential at -12bps (-3bps pre-data).
- The bills strip has extended its bull-flattener after the data, with pricing +6 to +9.
- RBA-dated OIS pricing is 2-10bps softer across meetings today. A 25bp rate cut in August is given a 98% probability, with a cumulative 63bps of easing priced by year-end.
- Tomorrow, the local calendar will be empty apart from the AOFM’s planned sale of A$1100mn of the 1.00% 21 November 2031 bond.
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ASIA STOCKS: Geopolitics Dragging Markets Lower
Major bourses in Asia were lower today as the uncertainty in the Middle East weighs on sentiment, in a day light on economic news in the region. Korea's KOSPI had closed in on 3,000 early in the trading day only for a complete turnaround and head lower, following the lead from elsewhere.
- In China, the Hang Seng drifted marginally lower by -0.13% and remains down by -0.55% over the last five trading days. The CSI 300 followed, down -0.15%, the Shanghai Composite down -0.19% and the Shenzhen Composite is down a mere --0.04% and is barely positive over the last five trading days.
- The KOSPI is down -0.34% in what was a complete turnaround having rallied early. It remains one of the strongest in the region over the last five trading days up over 2%
- The FTSE Malay KLCI is down -0.39% following yesterday's modest gains.
- The Jakarta Composite is up by +0.70% taking back yesterday's losses of -0.68% to stem four consecutive days of losses.
- The FTSE Straits Times in Singapore is up +0.28% whilst the PSEi in the Philippines has gained +0.53%
- The NIFTY 50 in India is down -0.36% given back from yesterday's gains of +0.92%
INDONESIA: MNI BI Preview-June 2025: Consecutive Cuts Unlikely
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- Bank Indonesia's (BI) decision is announced on June 18 and it is likely to keep rates at 5.5% after cutting them 25bp in May, although 9 out of 31 analysts on Bloomberg expect another 25bp reduction.
- With the focus remaining on the currency, we believe that BI will be cautious regarding back-to-back easing given that the Fed is widely expected to be on hold this month and it isn’t expected to resume cutting until later this year.
- With the economy slowing and inflation “controlled”, BI is likely to retain its easing bias, be cautious and look for opportunities to ease further going forward depending on global and Fed developments.
FOREX: Asia FX Wrap - The USD Continues To Struggle
The BBDXY has had a range of 1201.63 - 1203.68 in the Asia-Pac session, it is currently trading around 1201.”FX traders will be impressed at the PBOC’s confidence in the yuan, despite all the uncertainty around the Middle East. Meanwhile, US importers are increasingly being asked by their foreign counterparties to settle transactions in currencies other than the US dollar, including renminbi.”(BBG)
- EUR/USD - Asian range 1.1543 - 1.1567, Asia is currently trading 1.1565. EUR has rejected the move above 1.1600 but dips should continue to find demand, first support back towards the 1.1400 area then 1.1100/1200. EUR/USD looked to have broken the pivotal 1.1500 area last week, this needs to be sustained to signal a larger move higher.
- GBP/USD - Asian range 1.3558 - 1.3580, Asia is currently dealing around 1.3575. The GBP continues to hold above its Weekly pivot around 1.3500, it needs a catalyst for the move higher to regain momentum. First support seen back towards 1.3400/50.
- USD/CNH - Asian range 7.1787 - 7.1860, the USD/CNY fix printed 7.1746. Asia is currently dealing around 7.1820. Sellers should be around on bounces while price holds below the 7.2500 area and the PBOC manages the fix lower.
- Cross asset : SPX -0.40%, Gold $3390, US 10-Year 4.436%, BBDXY 1201, Crude oil $72.18
Data/Events : Germany ZEW Survey
Fig 1: USD/CNH Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
