AUSSIE BONDS: Little Changed After US Tsys Finish Steady
ACGBs (YM flat & XM +0.5) are little changed after a choppy and somewhat indecisive first trading session of 2025 for US tsys. Policy uncertainties with the incoming Trump 2.0 administration, especially regarding tariffs, taxes, and regulations continue to be the focus. US tsy yields were several basis points lower early but reversed course after better-than-expected jobless claims and PMI Mfg.
- Initial claims in the Dec 28 week fell to 211k from 220k. Final December S&P Global US manufacturing PMI reading showed less of a deterioration than implied by the flash estimate, coming in at 49.4 (49.7 prior, 48.3 prelim).
- Friday US data: ISM mfg & prices paid at 1000ET. Fed speak: Richmond Fed Barkin, bankers assn address (text, Q&A) at 1100ET. On Saturday: SF Fed Daly & Fed Gov Kugler mon-pol panel event (no text, Q&A) at 1730ET.
- Cash ACGBs are flat to 1bp richer with the AU-US 10-year yield differential at -13bps.
- The bills strip is +1 across contracts.
- RBA-dated OIS pricing is little changed. A 25bp rate cut is more than fully priced by April (127%), with a February cut at a 61% chance.
- Today, the local calendar is empty. The next release is the S&P Global Composite & Services PMIs on Monday.
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ASIA: Government Bond Issuance Today (updated)
- Bank of Thailand to Sell THB40bn of 182-Days FRNs.
- Hong Kong to Sell HK$0.5bn15-year Bonds.
- Hong Kong to Sell HK$3.0bn 5-year Bonds.
- China Plans to Sell 5 Year Bonds.
- China to Sell CNY45bn 2029 Bonds.
- Bank of Korea to Sell KRW1.8tn 2-Year Bonds.
- India to Sell INR70bn 91-Day Bills.
- India to Sell INR60bn 182-Day Bills.
- India to Sell INR60bn 364-Day Bills.
- Vietnam To Sell VND 1.5Tln 2029 Bonds; (TD2429012)
- Vietnam To Sell VND 1.0Tln 2039 Bonds; (TD2439032)
- Vietnam To Sell VND 5.0Tln 2034 Bonds; (TD2434027)
- Vietnam To Sell VND 1.5Tln 2054 Bonds; (TD2454046)
JPY: JPY/KRW Surges On South Korean Political Turmoil, USD/JPY Little Changed
USD/JPY saw fresh lows of 148.65 in Tuesday trade, before the pair rebounded. We track near 149.60 in early Wednesday dealings, little changed in aggregate for Tuesday's session. Intra-session lows for USD/JPY from Tuesday coincided with a sharp spike higher in USD/KRW, as political turmoil gripped South Korea and broader global markets after the President's martial law declaration (which was later withdrawn). JPY/KRW spot got close to 9.70 (fresh highs back to 2023), before retracing lower.
- Outside of South Korea related gyrations in USD/JPY, helping drag the pair off lows was the better than forecast US JOLTs data. US yields finished higher across the Tsy benchmarks as well, led by the back end.
- With divergent monetary policy paths clearly weighing on USDJPY in recent weeks, Friday’s US employment report remains the next focus, as well as wage data from Japan. On the downside, 148.17 support is next, the 50% retracement of the Sep 16/Nov 15 rally. On the topside, the 50-day EMA is at 151.40.
- Today on the data front we have PMI services revisions for Nov.
- Also note the following option expiries for NY cut later today: Y143.50($2.2bln), Y147.00($540mln), Y151.15-25($935mln).
ASIA: Government Bond Issuance Today.
- Bank of Thailand to Sell THB40bn of 182-Days FRNs.
- Hong Kong to Sell HK$0.5bn15-year Bonds.
- Hong Kong to Sell HK$3.0bn 5-year Bonds.
- China Plans to Sell 5 Year Bonds.
- China to Sell CNY45bn 2029 Bonds.
- Bank of Korea to Sell KRW1.8tn 2-Year Bonds.
- India to Sell INR70bn 91-Day Bills.
- India to Sell INR60bn 182-Day Bills.
- India to Sell INR60bn 364-Day Bills.
