EM ASIA CREDIT: Indonesia: New USD deal Priced

JGB futures got to 138.17, +.13 versus settlement levels post the Tokyo close on Monday. The general positive tone to global futures helped sentiment in this space, although JGB futures remain off Friday highs from last week. 

• From a technical standpoint, a bear threat in JGB futures remains present despite the recovery of recent lows, including the rally into the Friday close. A resumption of weakness would signal scope for an extension towards 136.57, a Fibonacci projection. Initial short-term resistance is 139.05, the Aug 4 high. A breach would be a positive development for bulls.
• Until we get greater clarity around the local political outlook, JGBs may lag US Tsy bond gains. The US-JP 10yr government bond yield spread is tracking lower, last at +247bps (although some catch up from 10yr JGB yields may be seen today). We were around +263bps at the end of Aug.
• Via BBG: " Sanae Takaichi, who is polling at 23% nationally according to a Nikkei survey but has weaker backing within the Liberal Democratic Party" is in favor fiscal and monetary policy easing, while "Shinjiro Koizumi is polling 22% nationally, but is the clear party favorite with support at 32% among LDP members. " (Koizumi sits more hawkish relative to Takaichi).
• In the cash JGB space, the 10yr yield finished up at 1.57% yesterday, while the 2/30s JGB curve finished up at +245bps, around the May highs.
• Todya on the data front, Aug money stock figures are out, along with Aug machine tool orders. 

Q2 NZ business sales values rose 2.1% q/q with profits up 4.2%. Salaries and wages rose only 1.2% q/q. Manufacturing volumes fell 2.9% q/q after rising 2.4%. Q2 GDP is released on September 18 and the RBNZ is forecasting it to fall 0.3% q/q. Data has shown weak building, goods exports and manufacturing volumes. The RBNZ is expected to cut rates at its October and November meetings.

• 8 of the 14 industries recorded a rise in sales in Q2 with electricity & gas jumping 16% q/q, mining up 2.5% and information media & telecoms up 3.8% but manufacturing down 3%.
• 9 of the 13 manufacturing components posted a quarterly decline in volumes in Q2 suggesting the weakness was broad-based.
• On the positive side, Q2 real retail sales rose 0.5% q/q but merchandise export volumes fell 3.7% q/q and building volumes -1.8% q/q. Manufacturing inventory volumes rose 0.8% y/y.

Aussie bond futures are higher in the first part of Tuesday dealings, following the US lead from Monday's session. Back end futures are leading, with the 10yr (XM up 4bps) to 95.735, while 3yr futures (YM) are +1bps firmer to 96.575. 

• For 10yr futures on the technical side - to the upside, the next resistance is at 96.207, a Fibonacci retracement point. Initial near-term resistance is seen at 95.805, the Aug 4 high. A break of this hurdle would be a bullish development.
• ACGB benchmark yields are off, led by the back end. The 10yr yield down close to 4bps and sub 4.24%. The 3yr yield is at 3.41%, down less than 1bps at this stage. The ACGB 3/10s curve is flatter by 3bps, last +83bps. 
• Today sees September Westpac consumer confidence which rose each of the four months to August helped by lower rates and the prospects of further RBA easing. At 98.5 last month, it is now approaching the neutral 100-level.
• The NAB August business survey is also out today. Business confidence has been trending higher since March and is positive again. Conditions however remain soft, although June/July printed above the 2025 average. Employment and cost/price components will be monitored closely.