AUSSIE BONDS: Key Resistance For Futures Remains Intact, RBA Mins Tomorrow
Aussie bond futures are holding higher, but away from best levels. Important key resistance points remain intact. 3yr futures were last 96.47 (+7bps), while 10yr futures were at 95.685 (+7bps). Earlier highs were at 96.505 for the 3yr and 95.7050 for the 10yr. Some cap for futures has come from the softer US Tsy futures tone and better risk appetite trends more broadly, with US official comments showing reduced recent rhetoric around US-China trade issues (albeit still with the threat of higher tariff levels come Nov 1, per remarks by US President Trump).
- Short term resistance points for futures are as follows. For 3yr: RES 1: 96.615 - High Sep 12 , while for 10yr: RES 1: 96.615 - High Sep 12.
- Cash ACGB yields are around 6-7bps lower across the curve, with the front end slightly weaker in yield terms. The 33yr benchmark last 3.50%, while the 10yr was at 4.29%, with little change in the Au3/10s curve.
- The bias is likely to be fade this yield move in Aussie, given RBA comfort around the current macro backdrop. A risk remains from higher US tariff levels on China, export controls etc, which could see negative spill over to the Australian economic outlook. For the 3yr Aussie bond, moves under 3.45% may be faded.
- At this stage, per Polymarket, 100% tariff odds by Nov 1 sit at 17%.
- Looking ahead to tomorrow, the publication of the September 30 decision minutes will be important given the Board’s more cautious tone and Bullock avoiding to state what the current stance is. She also noted that Board is concerned about certain CPI components including market services. NAB’s September business survey also prints on Tuesday.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
AUSSIE 3-YEAR TECHS: (U5) Bounces Further Off Support
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.860 - High Apr 07
- PRICE: 96.550 @ 15:36 BST Sep 12
- SUP 1: 96.430/95.900 - Low Sep 3 / Low Jan 14
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures are trading off recent lows. A resumption of gains from here would further narrow the gap with resistance at 96.730, the Sep 17 ‘24 high, leaving 96.860 as the next key level. Any continuation lower would instead strengthen a bearish threat. This would refocus attention on 95.760, the 14 Nov ‘24 low. Conversely, a reversal higher would open 96.860, the Apr 7 high.
FED: MNI Fed Preview-September 2025: A Reluctant Return To Easing
We've published our preview of the upcoming FOMC meeting - Download Full Report Here
- The Federal Reserve is set to resume its easing cycle at the September 16-17 meeting with a 25bp cut to the funds rate range to 4.00-4.25%.
- The decision to cut after a 5-meeting pause was well-telegraphed by Chair Powell, whose Jackson Hole speech described a “shifting balance of risks” toward a weaker labor market that “may warrant adjusting our policy stance”.
- The updated quarterly projections aren’t likely to bring many changes to the macroeconomic variables, but as usual the signal sent from the Fed rate “Dot Plot” will garner attention. A Committee split between expecting one or two further cuts this year is likely, keeping each of the remaining meetings of 2025 “live”.
- The Statement will downgrade the description of the labor market to reflect a rise in the unemployment rate and poor payrolls growth, and is likely to include at least one dissent to the rate decision.
- But with a Committee that is fairly divided on the way forward, Powell will be noncommittal on future action, reiterating that policy is not on a preset course, and upcoming decisions will be data-dependent.
- A key undercurrent is an increasingly activist approach to Fed personnel management from the White House, which leaves the composition of the FOMC uncertain not just over the medium-term but also at this meeting.
MNI’s separate preview of sell-side analyst summaries to follow on Monday Sep 15
RATINGS: Fitch: France Cut To A+ From AA, Portugal Up To A From A-
Fitch has downgraded France's sovereign rating to A+ (with stable outlook) from AA-. Release here.
- Among other factors in the decision, Fitch cites "High and Rising Debt Ratio", "Political Fragmentation Hinders Consolidation", "Weak Fiscal Record", "High 2025 Deficit", "Uncertain Fiscal Consolidation Path", and "Fiscal Rigidities".
- In "Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade", Fitch cites "Public Finances: A sustained increase in government debt/GDP over the medium term, due to failure to implement fiscal consolidation measures and/or a persistent increase in financing costs" and "Macro: Materially lower economic growth prospects and weakened competitiveness." Conversely, potentially leading to positive ratings action would be "Public Finances: Confidence that government debt/GDP will be put on a downward trajectory over the medium term, for example, due to fiscal consolidation and/or stronger economic growth".
- Fitch also raised Portugal to A (stable outlook) from A-, while elsewhere, S&P raised Spain to A+ (stable outlook) from A.
- As MNI wrote earlier, we expected France to be downgraded to A+ and Portugal to be upgraded to A.
