AUSSIE BONDS: Holding Weaker Despite Weaker Capex, Trump Tariff HLs In Focus
ACGBs (YM -2.0 & XM -3.0) are holding in negative territory.
- Q1 private capital expenditure volumes were weaker than expected, falling 0.1% q/q to be down 0.5% y/y driven by a contraction in machinery & equipment investment. Q4 was revised up to +0.2% q/q, there appears to be a trend of upward revisions to the previous quarter as was also the case with construction. Q1 GDP prints on June 4, with the inventory and net export components released on June 3, but currently it is looking soft.
- Cash US tsys are 2-4bps cheaper in today's Asia-Pac session.
- (Reuters) - A U.S. federal court on Wednesday blocked President Donald Trump's "Liberation Day" tariffs from going into effect, ruling that the president overstepped his authority by imposing across-the-board taxes on imports from nations that sell more to the United States than they buy."
- Cash ACGBs are 2-3bps cheaper with the AU-US 10-year yield differential at -15bps.
- The bill strip has cheapened, with pricing -2 to -3.
- RBA-dated OIS pricing is slightly firmer across meetings today. A 25bp rate cut in July is given a 54% probability, with a cumulative 68bps of easing priced by year-end.
- Tomorrow, the local calendar will see Retail Sales, Private Sector Credit and Building Approvals data.
- The AOFM plans to sell A$1200mn of the 4.25% 21 March 2036 bond tomorrow.
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FOREX: FOREX G10 Wrap - USD Can’t Hold Onto Gains
The BBDXY has had an Asian range of 1219.50 - 1222.42, Asia is currently trading around 1223. Spain is still searching for answers for Monday's Blackouts, the EU said there are no indications of a cyber attack. Bloomberg - “ Olli Rehn said there’s a danger that inflation will dip below the 2% target and that the euro’s strength has added “further complexity” to policy.”
- EUR/USD - Asian range 1.1374 - 1.1422, Asia is currently trading 1.1382. Intra-day support is around 1.1300, should this area not hold demand should remerge on dips back to 1.1100.
- GBP/USD - Asian range 1.3397 - 1.3444, the GBP continues to lead higher, testing decent Weekly resistance now around 1.3500.
- USD/JPY - Asian range 142.00 - 142.58, has drifted higher for most of the Asia session. On the day the 143 handle should once again offer supply, then more importantly the 145/146 area should once more offer good levels for sellers to reengage.
- USD/CNH - Asian range 7.2692 - 7.2887, the USD/CNY fix printed lower again at 7.2029. Bloomberg - “The yuan was boosted by a report that China vowed to comprehensively rectify all kinds of unreasonable regulations and practices that restrict market access.” This saw USD/CNH break below the 7.2800 support which contributed to sudden spikes in both the AUD and NZD.
- USD/CAD - Asian range 1.3809 - 1.3867, currently trading 1.3860. Canada’s Liberal Party wins the election too soon to know if it's by a majority. Bounces back to 140.00 should find sellers first up.
- Cross asset : SPX +0.21%, Gold 3317, US TYM5 111-27+, BBDXY 1222, Crude oil 61.60.
- Data/Events : Spain GDP & CPI, ECB CPI expectations, Germany consumer confidence
Fig 1 : GBP/USD Spot Weekly Chart
Source: MNI - Market News/Bloomberg
BONDS: NZGBS: Closed At Session Cheaps, Labour Demand & House Lending Up
NZGBs closed near session cheaps, with benchmark yields 3-4bps higher.
- No cash US tsys trading in Asia-Pac today, with Japan out. TYM5 is trading at 111-27+, -0-01+ from closing levels
- Filled jobs rose 0.2% m/m in March but are still down 1.5% y/y after being flat and down 1.6% y/y in February. However, the 3-month annualised rate at 0.4% turned positive for the first time since April 2024, signalling that Q1 employment may be flat to slightly higher on the quarter when labour market data is released on May 7.
- Labour demand remains weak but shows some tentative signs that it has begun to gradually recover. 3-month momentum is improving for filled jobs and also SEEK job ads, which rose 8.7% annualised in March.
- The RBNZ’s residential mortgage lending data showed lending to all borrowers at its highest since November 2011. First-home buyers up 24% y/y.
- Swap rates closed flat to 1bp higher.
- RBNZ dated OIS pricing closed showing 27bps of easing priced for May, with a cumulative 82bps by November 2025.
- Tomorrow, the local calendar will see ANZ Business Confidence.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond, NZ$150mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.
BUND TECHS: (M5) Key Resistance Remains Exposed
RES 4: 133.90 1.236 proj of the Mar 25 - Apr 7- 9 price swing
- RES 3: 133.00 round number resistance
- RES 2: 132.56 High Feb 28 and a key resistance
- RES 1: 132.03 High Apr 7 and the bull trigger
- PRICE: 131.24 @ 05:31 BST Apr 29
- SUP 1: 130.70/129.92 20-day EMA / Low Apr 11
- SUP 2: 129.02 Low Apr 10
- SUP 3: 128.60 Low Apr 9 and a key support
- SUP 4: 128.47 Low Mar 28
Bund futures have pulled back from their recent highs. Despite the latest move down, a bull cycle remains in play and the sell-off between Apr 7 - 9 is considered corrective. Attention is on resistance at 132.03, the Apr 7 high and a bull trigger. Clearance of this level would confirm a resumption of the uptrend and open 132.56, the Feb 28 high. Firm support lies at 128.60, the Apr 9 low. A break of this level would alter the picture.
