AUSSIE BONDS: Marginally Firmer To Start
Aussie bonds have firmed at the margin on Thursday, leaning on a late bid in U.S. Tsys for support. That leaves YM +1.0 & XM +2.0, with the former a touch shy of its overnight high, while the latter has backed off from its early Sydney peak after breaching its own overnight high. Cash ACGBs are 1.5-2.5bp richer across the curve, with the 7- to 12-Year zone leading after 10s outperformed on the U.S. Tsy curve on Wednesday, aided by a well-received round of 10-Year Tsy supply.
- Bills are +1 to -1 through the reds, with RBA-dated OIS pricing little changed early today (~20bp of tightening showing for next month, alongside a terminal cash rate of just under 4.00%)
- Local headline flow has been fairly subdued since the Sydney close, with continued focus on Tuesday’s RBA decision and subsequent adjustments to cash rate path expectations. Note that RBA Governor Lowe will appear in front of the House of Representatives Standing Committee on Economics next Friday.
- Elsewhere, the latest NAB-SEEK labour market report noted that “job ads rose 2.8% in January. The increase followed 7 consecutive months of declines and may suggest some stabilisation after a rapid retreat from May 2022 highs. Despite the falls into the end of 2022, Seek Job Ads remain 39% higher than pre-pandemic December 2019 levels, indicative of overall continuing strong labour demand.”
- There isn’t anything of note on the local docket on Thursday.
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AUSSIE 3-YEAR TECHS: (H3) Solid Weekly Close
- RES 3: 97.530 - High Mar 31 (cont)
- RES 2: 97.295 - High Aug 3 (cont)
- RES 1: 96.958 - High Dec 12 and a key resistance
- PRICE: 96.610 @ 15:23 GMT Jan 09
- SUP 1: 96.300 Oct 26
- SUP 2: 96.070 - Low Sep 27 and bear trigger (cont)
- SUP 3: 95.960 - Low Jun 17 (cont)
Aussie 3yr futures rallied into the Friday close amid global fixed income strength. Despite the bounce, prices still hold shy of the first key resistance at 96.958 and bulls will need to top this mark to the shift the still-bearish backdrop. Any continuation lower would signal scope for weakness towards 96.070, the Sep 27 low on the continuation chart. This level is a key support and bear trigger.
AUSSIE BONDS: Marginally Firmer After Two-Way Overnight Session
Aussie bond futures operate in close proximity to yesterday’s settlement levels, with YM unchanged and XM +1.0 after a contained two-way overnight session, driven by the fluctuations in wider core global FI markets (weakness in the London morning, followed by a bit of a recovery during the NY session). Futures have ticked lower in early Sydney dealing. Meanwhile, wider cash ACGBS are ~1bp richer across the curve.
- Bills are 1-7bp richer through the reds, bull flattening, while RBA dated OIS is little changed, showing 18bp of tightening for next month’s meeting, alongside a terminal cash rate of just over 3.90%.
- Weekly ANZ Roy Morgan consumer confidence data provides the only point on a very limited domestic docket on Tuesday. That will leave focus on matters across the wider Asia-Pac region, including Tokyo CPI, moves in Chinese assets and the return of Tokyo market participants (and therefore JGBs) after the elongated weekend in Japan.
- Fed Chair Powell’s Tuesday address provides the nearest meaningful macro risk event.
BONDS: NZGBS: A Touch Firmer, Swaps Tighten
Cash NZGBs are 2bp richer across the curve early on, benefitting from an extension of Friday’s bid in U.S. Tsys during Monday’s NY session, which more than countered the spill over from some modest cheapening in core global FI markets during the London morning.
- A bounce in German FI into the cash close helped broader core global FI, while softer short-term consumer inflation and household spending expectations in the latest NY Fed survey provided another limited catalyst.
- Swaps rates are 4-6bp lower across the curve, with swap spreads tightening.
- RBNZ dated OIS pricing is little changed, to a touch softer, looking for 66bp of tightening at the Feb ’23 meeting alongside a terminal OCR of just under 5.50%.
- Today’s data docket is light, for both NZ and the wider Asia-Pac region, which will leave focus on Tokyo CPI, Chinese assets and the return of Tokyo market participants (and therefore JGBs) after the elongated weekend in Japan.
- Fed Chair Powell’s Tuesday address provides the nearest meaningful macro risk event.
