US TSYS: Marginally Richer In Asia
Dec-27 2023 04:15
TYH4 deals at 112-22+, -0-00+, a 0-05+ range has been observed on volume of 27k.
- Cash tsys sit 1-2bps richer across the major benchmarks, light bull flattening is apparent.
- Tsys are a touch firmer in Asia today, support in the space was seen after a bid in JGBs spilled over however the move didn't follow through. Tsys held richer dealing in narrow ranges for the majority of the session.
- FOMC dated OIS now price ~90bps of cuts by November 2024.
- Due today are the Richmond Fed Mfg Index and Dallas Fed Services Activity, we also have the latest 5-Year supply.
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BONDS: Tick Lower Through Monday's Session
Nov-27 2023 03:47
NZGBs have ticked lower through Monday's session however ranges remained narrow in the space, and sit 1-3 bps cheaper across the major benchmarks. Light bear steepening has been observed.
- Pressure was seen on the space as regional equities ticked lower alongside US equity futures and the USD firmed as the PBoC vowed to boost bond issuance by private firms, and also support M&A's, IPOs of private sector firms.
- 10 Year NZ US swaps spreads remain stable and sit at +52bps.
- With Wednesday's RBNZ meeting in view OIS price no change in the OCR with ~40bps of cuts by October 2024.
- PM Luxon noted that he is concerned at the risk of recent fiscal deterioration.
- Looking ahead, the data docket is empty tomorrow. The aforementioned RBNZ meeting is the next event of note in NZ.
HKD: USD/HKD Spot Sub 7.7900 On Further Hibor Rises
Nov-27 2023 03:38
Spot USD/HKD continues to trend lower. The pair was last near 7.7875, against earlier lows of 7.7861. We opened at 7.7928. Even as CNH has stabilized somewhat, HKD continues to enjoy yield support as Hibor rates climb further.
- The 1 month his a fresh 16yr year high today at 5.534%, (+15.5bps). The 3 month fixed at 5.71%, +6.6bps. The US-HK 3 month yield continues to track lower, last at -32bps, fresh lows back to Jan of this year.
- Seasonality in terms of cash demand and a low start starting point for the aggregate balance, are being cited as factors driving firmer yields.
- Early Dec 2022 lows were at 7.7617, which could be targeted if we breach 7.7800.
- The data calendar has Oct trade figures out later today. The market expects exports at -2.9% y/y (prior -5.3%). Arguably US data outcomes, particularly in relation to prices, will have a bigger influence on USD/HKD as we progress through this week.
JGBS: Futures Down, But Up From Session Lows, Ueda Due In Parliament Later
Nov-27 2023 02:22
At the lunch break, JGB futures sit just above session lows (145.53), last 145.60, -.06.
- This broadly matches the US Tsy future trajectory, which are also up from session lows (last 108-09+).
- Some marginal support may be coming through from lower US equity futures and a softer oil price backdrop.
- In the cash JGB space, yields sit marginally higher. The 10yr is a touch above 0.78%. Firmer yield gains are evident across the 20-40yr tenors. The 20yr back above 1.51%. The 10 swap rate is back above 0.99%. But like the JGB space, the back end of the curve is seeing slightly strong yield gains.
- Still to come is BoJ Governor Ueda before parliament.
