JAPAN DATA: March IP Below Expectations, Trend Close To Flat Y/Y
Apr-30 00:14
Japan March preliminary industrial production was below market forecasts, down 1.1%m/m, versus -0.4% expected. In y/y terms we came in at -0.3% versus 0.8% forecast (0.1% was the prior outcome).
- The y/y trend hasn't been able to see much upside traction for a number of years now. The current y/y pace is slightly above averages for 2023/24 but only marginally.
- By sub-sector, capital goods production rose 0.6%m/m, but ex transport was negative m/m. Shipments were negative. Durable consumer goods saw a sharp 6.5% fall, while non-durable consumer goods were also down. A government official also noted the sharp falls in motor vehicle production in March (down 5.9%m/m) due to lower exports and supply constraints (per RTRS).
- METI still looks for solid rises in output for April and May, although the trade/tariff outlook may derail such projections.
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AUSSIE BONDS: Solid Absorption of May-28 Supply With More Demand Present
Mar-31 00:11
The latest round of ACGB May-28 supply sees the weighted average yield print 1.15bps through prevailing mids (per Yieldbroker), extending the recent trend of firm pricing at ACGB auctions.
- Moreover, the cover ratio jumped to a robust 4.4250x from 3.5400x at the previous outing.
- As highlighted in the preview, the outright yield was 15-20bps higher than the previous but around 55bps lower than the cycle peak in early November last year.
- Additionally, market expectations for RBA easing in 2025 have become more aggressive ahead of tomorrow’s RBA Policy Decision. While a 25bp rate cut in April is given only a 5% probability, a cumulative 70bps of easing is priced by year-end.
- Also on the positive side, it's important to note that the May-28 bond was included in the YM basket and that sentiment towards global bonds has improved recently.
- There has been no notable movement in the cash line in post-supply dealings.
AUSSIE BONDS: ACGB May-28 Auction Results
Mar-31 00:03
The Australian Office of Financial Management (AOFM) sells A$600mn of the 2.25% 21 May 2028, issue #TB149:
- Average Yield (%): 3.6498 (prev. 3.5038)
- High Yield (%): 3.6525 (prev. 3.5050)
- Bid/Cover: 4.4250x (prev. 3.5400x)
- The amount allotted at the highest accepted yield as a percentage of the amount bid at that yield (%): 72.4 (prev. 96.4)
- Bidders 37 (prev. 32), successful 11 (prev. 12), allocated in full 7 (prev. 7)
GOLD: New Highs in Place as Market Readies for Tariffs.
Mar-30 23:55
- Gold begins another week with new highs in place, though for the first time in a while, the pace may be coming out of this rally.
- A steadily falling call skew on gold ETF’s, with investors paying the smallest premium in over a year, shows that the bullish exuberance that the gold market has enjoyed could be running out of steam.
- Gold touched new highs last week and has opened up strongly touching a new high again in Asia trading this morning at US$3,088.80.
- As we approach the deadline for tariffs, the markets will remain cautious, providing a good back drop for gold demand in the early part of the week.
