MNI EUROPEAN OPEN: Australia Jobs Beat Aids Local Yields
EXECUTIVE SUMMARY
- FED’S DALY SAYS US ECONOMY STILL SOLID, OFFICIALS CAN BE PATIENT - BBG
- REPUBLICANS PUSH AHEAD ON TRUMP TAX, SPENDING PLANS, DESPITE INTRA-PARTY DISSENT - RTRS
- PUTIN, TRUMP TO SKIP UKRAINE'S PEACE TALKS THAT RUSSIAN LEADER PROPOSED - RTRS
- TOP IRANIAN OFFICIAL SAYS TEHRAN WOULD FOREGO HIGHLY ENRICHED URANIUM IN NUCLEAR DEAL WITH TRUMP - NBC
- AUSSIE UNEMPLOYMENT STEADY AT 4.1% - MNI BRIEF
Fig 1: Australia: Employment Growth Y/Y
Source: MNI - Market News/Bloomberg/Refinitiv.
EU
RUSSIA/UKRAINE (BBG): “Russian President Vladimir Putin named a group of low-level officials to represent his government at talks with Ukraine in Turkey, and gave no indication that he planned to join the negotiations.”
TRADE (POLITICO): “The United States has sent a letter to the European Commission in a first sign it is willing to engage in a negotiated deal with the bloc in their trade war, four EU diplomats told POLITICO.”
GERMANY (POLITICO): “Germany may return to conscription if too few people volunteer for the military, Defense Minister Boris Pistorius warned Wednesday. Speaking in his first parliamentary address since the new government took office, Pistorius said a new voluntary military recruitment program will begin this year to rebuild Germany’s under-strength army.”
US
FISCAL (RTRS): “Republicans in the U.S. Congress advanced major elements of President Donald Trump's budget package on Wednesday, as key committees approved tax cuts that would add trillions of dollars to the U.S. debt, while cutting spending on healthcare for the poor and disabled.
DOLLAR (BBG): “US officials seeking to negotiate trade deals around the world are not working to include currency policy pledges in the agreements, according to a person familiar with the matter.”
FED (BBG): “Federal Reserve Bank of San Francisco President Mary Daly said the strength of the US economy allows policymakers to be patient as they wait for more evidence of how the Trump administration’s policies will affect businesses and households.”
FED (MNI BRIEF): Federal Reserve Vice Chair Philip Jefferson said Wednesday interest rates are "well positioned to respond in a timely way to potential economic developments" such as the fallout of global tariffs, echoing the view of Chair Jerome Powell and others.
ECONOMY (BBG): “Billionaire Steve Cohen said the chance of a recession in the US now stands at about 45%.”
OTHER
IRAN (NBC): “Iran is ready to sign a nuclear deal with certain conditions with President Donald Trump in exchange for lifting economic sanctions, a top advisor to Iran’s supreme leader told NBC News on Wednesday.”
CANADA (MNI BRIEF): The first meeting of Mark Carney's new cabinet Wednesday showed division over the Prime Minister's pledge to turn Canada into a conventional and green energy superpower.
AUSTRALIA (MNI BRIEF): The unemployment rate held steady at 4.1% over April, in line with expectations, while employment increased by 89,000, higher than the 22,000 jobs expected, data from the Australian bureau of statistics showed Thursday.
TAIWAN (BBG): “Taiwan’s talks with the US didn’t involve forex issues, Finance Minister Chuang Tsui-yun said, according to Central News Agency.”
APEC (RTRS): "The Asia-Pacific Economic Cooperation (APEC) grouping warned on Thursday that exports in the region will barely grow this year amid U.S. tariffs, as the 21-member bloc kicked off an annual gathering of its trade ministers."
CHINA
RRR (SECURITIES DAILY): “The People’s Bank of China is expected to cut the reserve requirement ratio by another 50 basis points later this year, following the 50bp cut on Thursday, Securities Daily reported, citing analysts.”
TRADE (YICAI): “Exporting firms have agreed with U.S. buyers to speed up orders, production and shipment during the 90 day temporary suspension of reciprocal tariffs, Yicai.com has reported. Li Mingyang, a general manager at an electric fan firm, said shipping space to the U.S. has become tight, costs have increased and customers are urging shipment.”
CORPORATE BONDS (BBG): "The Chinese central bank’s latest monetary easing has triggered a fresh rally in local corporate bonds, sending risk premiums to a record low as investors ramped up leveraged bets."
CHINA MARKETS
MNI: PBOC Net Drains CNY94.1 Bln via OMO Thursday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY64.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY94.1 billion after offsetting the maturities of CNY158.6 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4814% at 09:53 am local time from the close of 1.5171% on Wednesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 49 on Wednesday, compared with the close of 46 on Tuesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Higher At 7.1963 Thurs; +0.40% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1963 on Thursday, compared with 7.1956 set on Wednesday. The fixing was estimated at 7.2169 by Bloomberg survey today.
MARKET DATA
NEW ZEALAND APRIL FOOD PRICES +0.8% M/M; MAR.+0.5%
AUSTRALIA MI MAY INFLATION EXPECTATIONS 4.1%; APRIL 4.2%
AUSTRALIA APRIL EMPLOYMENT +89.0K M/M; EST. 22.5K; MAR. +36.4K
AUSTRALIA APRIL JOBLESS RATE 4.1%; EST. 4.1%; MAR. 4.1%
AUSTRALIA APRIL FULL-TIME EMPLOYMENT +59.5K M/M; MAR. +12.2K
AUSTRALIA APRIL PART-TIME EMPLOYMENT +29.5K M/M; MAR. +24.2K
AUSTRALIA APRIL PARTICIPATION RATE 67.1%; EST. 66.8%; MAR. 66.8%
SOUTH KOREA MARCH ADJUSTED L MONEY SUPPLY +0.3% M/M; FEB. +0.6%
SOUTH KOREA MARCH ADJUSTED M2 MONEY SUPPLY -0.1% M/M; FEB. +0.7%
MARKETS
US TSYS: Asia Wrap - Quiet Session
TYM5 has traded slightly lower within a range of 109-18+ to 109-22 during the Asia-Pacific session. It last changed hands at 109-22, down 0-01 from the previous close
- The US 2-year yield has drifted lower, dealing around 4.049%, unchanged from its close.
- The US 10-year yield has drifted lower, dealing around 4.53%, down 0.01 from its close.
- (Bloomberg) -- “Taiwan’s Ministry of Finance said its reviews of US Treasury positions at state-backed banks and their internal risk-management measures have so far found no major issues.”
- “Fedspeak: Mary Daly said the economy’s strength allows policymakers to be patient. Philip Jefferson said tariffs and related uncertainty may slow growth and boost inflation but monetary policy is well positioned to respond.’(BBG)
- The 10-year Yield has broken above the 4.50% resistance. A sustained break above this level could see another round of selling targeting the 4.75% area. Support now seen back towards 4.35/40 where supply should now be seen.
- Data/Events : Retail Sales, PPI, Weekly Claims, Industrial Production and Capacity Utilization.
JGBS: Bear-Steepener, 30YY Hits 3.0%, Poor 5Y Auction, GDP Tomorrow
JGB futures are weaker, -31 compared to settlement levels, but sitting near of today’s Tokyo session range.
- Cash US tsys are little changed in today's Asia-Pac session after yesterday's heavy session. Today's US calendar will see a heavy round of economic data: Retail Sales, PPI, Weekly Claims, Industrial Production and Capacity Utilisation.
- Cash JGBs are flat to 9bps cheaper across benchmarks, but off the worst levels, with the steeper curve. The benchmark 5-year yield is 2.6bps higher at 1.003% after today's poorly received supply.
- Today’s 5-year JGB auction highlighted weak investor demand, with the auction price falling short of expectations at 100.07. The bid-to-cover ratio declined to 3.1894x from 3.8358x, while the tail widened slightly to 0.06 from 0.04—both pointing to a softer bid.
- Given the higher yield and steeper 2s/5s curve compared to last month, today’s outcome marks a notably weak signal.
- The cash 30-year yield is +4.8bps at 2.963% after setting a cycle high of 3.007%, the highest since late 2000.
- Swap rates are ~1bp lower out to the 20-year and flat beyond. Swap spreads are tighter.
- Tomorrow, the local calendar will see Q1 GDP (P) and IP data alongside a speech by BoJ Board Member Nakamura.
AUSSIE BONDS: Cheaper But Off Worst Levels Despite Jobs Beat
ACGBs (YM -6.0 & XM -5.5) are cheaper but notably better than Sydney session lows set following the release of stronger-than-expected employment data.
- Cash US tsys are little changed in today's Asia-Pac session after yesterday's heavy session. Today's US calendar will see a heavy round of economic data: Retail Sales, PPI, Weekly Claims, Industrial Production and Capacity Utilisation.
- Employment in April printed significantly higher than expected at +89k, but the unemployment rate remained at 4.1%.
- The April jobs data continue to show that Australia’s labour market remains tight with employment growth keeping up with the labour force over the last year. However, there are some early signs that workers would like more hours.
- Cash ACGBs are 6-7bps cheaper on the day with the AU-US 10-year yield differential at +1bps.
- The bills strip has retained its bear-steepener, with pricing -3 to -7.
- RBA-dated OIS pricing is 1-3bps firmer across meetings after the data. A 25bp rate cut in May is given an 89% probability (95% pre-data), with a cumulative 75bps (76bps pre-data) of easing priced by year-end.
- Tomorrow, the local calendar will be empty apart from the AOFM’s planned sale of A$800mn of the 2.50% 21 May 2030 bond.
BONDS: NZGBS: Bull-Steepener, Food Prices Highest Since Jan-24
NZGBs closed showing a bull-steepener, with benchmark yields 1-5bps lower. NZGBs outperformed their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials 7-8bps tighter versus yesterday’s close.
- Cash US tsys are little changed in today's Asia-Pac session after yesterday's heavy session.
- Today’s NZGB auction showed strong demand, especially the 5-year supply, with cover ratios of 6.00x (May-30) to 3.42x (May-41) across the lines.
- Swap rates closed flat to 2bps lower, with implied swap spreads wider.
- NZ food prices rose 0.8% m/m to be up 3.7% y/y in April, the highest since January 2024, after 0.5% m/m and 3.5% y/y. The increase was driven by higher grocery and non-alcoholic beverage prices. Other categories were also released for April, including electricity for the first time, accounting for 46.5% of the CPI basket. Electricity and gas prices are now included in the monthly releases.
- While April prices were mixed, activity remains soft, and so another 25bp rate cut remains likely on May 28.
- RBNZ dated OIS pricing closed little changed across meetings. 25bps of easing is priced for May, with a cumulative 68bps by November 2025.
- Tomorrow, the local calendar will see BusinessNZ Manufacturing PMI, RBNZ Inflation Expectations and Non-Resident Bond Holdings.
The BBDXY has had a range of 1229.14 - 1232.16 in the Asia-Pac session, it is currently trading around 1230. “Vladimir Putin appointed low-level officials for Ukraine talks in Turkey, dashing Volodymyr Zelenskiy’s hopes to speak to him directly. Donald Trump downplayed the chances of joining the gathering, but said Marco Rubio will go to Istanbul”(BBG).”Oil dropped after NBC reported Iran is willing to forgo nuclear weapons in exchange for relief from US sanctions”(BBG).”Foreign investment in Europe fell to a nine-year low in 2024, underscoring the region’s struggle to lure business even before Trump’s trade war darkened the outlook”(BBG).
- EUR/USD - Asian range 1.1173 - 1.1201, Asia is currently trading 1.1195. EUR/USD has had a quiet session as the market consolidates. The market is still expected to use dips as a buying opportunity, dips back towards 1.09/1.10 should be well supported.
- GBP/USD - Asian range 1.3259 - 1.3287, Asia is currently dealing around 1.3280. Decent demand for GBP emerged sub 1.3200 , it has since bounced back to the middle of its recent range of 1.3150 - 1.3450.
- USD/CNH - Asian range 7.2056 - 7.2157, the USD/CNY fix printed 7.1963. Asia is currently dealing around 7.2095. Sellers should be found on a bounce back towards 7.24/25 again.
- Cross asset : SPX -0.19%, Gold $3150, US 10-Year 4.53%, BBDXY 1230, Crude oil $61.75
Data/Events : Retail Sales, PPI, Weekly Claims, Industrial Production and Capacity Utilization
Fig 1: GBP/USD Spot Hourly Chart
Source: MNI - Market News/Bloomberg
JPY: USD/JPY Asian Wrap - Drifts Lower
The Asia- Pac range has been 145.96 - 146.75, Asia is currently trading around 146.05. USD/JPY has drifted lower for most of our session as the move higher in risk continues to run out of steam.
- Today’s 5-year JGB auction highlighted weak investor demand, with the auction price falling short of expectations at 100.07. The bid-to-cover ratio declined to 3.1894x from 3.8358x, while the tail widened slightly to 0.06 from 0.04—both pointing to a softer bid.
- “It looks as though investors are holding back for a 1% yield, which wasn’t reached today even though secondary yields did touch that level earlier this week. All of which show the upcoming 20- and 40-year auctions this month will be tough to complete.”(BBG)
- USD/JPY is consolidating after a powerful break higher, support is now back towards 145.00. With the move higher in risk stalling the impetus has been taken out of the move higher for now.
- MNI FX OPTIONS: Expiries for May15 NY cut 1000ET (Source DTCC)USD/JPY: Y140.00($3.4bln), Y145.00($2.1bln), Y146.95-05($1.3bln)
AUD/USD Wrap - Bounces On Higher April Employment
MNI AU - Employment in April printed significantly higher than expected at +89k but the unemployment rate remained at 4.1% as the participation rate rose to 67.1%. The strength was in both full-time and part-time jobs.
- The AUD jumped 15/20 points on the better employment data to print a high of 0.6458 on the day.
- It then drifted off from those levels for the balance of our session, we now head into the London session trading around 0.6440.
- The AUD/USD has found decent supply back towards 0.6500 and is looking to consolidate its gains on a 0.6400 handle.
- Key Support in the AUD is back towards 0.6350 a close back below here would start to challenge the newly formed uptrend. While this holds the market should find demand on dips.
MNI FX OPTIONS: Expiries for May15 NY cut 1000ET (Source DTCC) : AUD/USD: $0.6475(A$1.3bln)
Fig 1: AUD/USD spot Hourly Chart
Source: MNI - Market News/Bloomberg
The NZD had a range in our session of 0.5881 - 0.5916, going into the London session around 0.5905. A very quiet session for risk today with the NZD trading sideways.
- The NZD up moved in sympathy with the AUD as it popped higher on a better employment print.
- AUD/NZD continues to grind higher, attempting to get a foothold above 1.0900, the better AUD data gave it a lift printing a high of 1.0922 in our session. Support is seen back towards 1.0800 and a sustained break above 1.0900 would turn the focus higher once again.
- "APEC SEES REGIONAL GDP GROWTH FOR 2025 AT 2.6% DOWN FROM 3.3% EARLIER, APEC SEES EXPORT GROWTH FOR 2025 AT 0.4% VERSUS 5.7% IN 2024” - RTRS
- The NZD now seems to be comfortable in a 0.5800/0.6050 range and awaits a catalyst to provide the impetus to break-out.
- The support back towards 0.5800 held very well, and while this continues to hold expect buyers to return on dips. The first target is the highs just above 0.6000, a break above here is needed to regain momentum higher.
MNI FX OPTIONS: Expiries for May15 NY cut 1000ET (Source DTCC): NZD/USD: $0.5880(N$1.0bln)
Fig 1: NZD/USD Spot Hourly Chart
Source: MNI - Market News/Bloomberg
ASIA STOCKS: Most Major Bourses Lower Today
Despite solid earnings from Tencent (revenue up 13% in the March quarter) China's major bourses fell today. Next to report will be Alibaba which reports after Hong Kong close today with investors looking for an update on the launch of its new video generating model.
In what felt like a day of consolidation where the trade truce euphoria ran out of steam, most major bourses across the region fell today.
- China's Hang Seng is down -0.25% today following yesterday's strong gains. The CSI 300 is down -0.60%, Shanghai down -0.40% and Shenzhen down -0.94%.
- The KOSPI is down today by -0.55% following yesterday's gains of +1.2%.
- The FTSE Bursa Malaysia KLCI Index is down -0.54% but remains higher for the week.
- The Jakarta Composite continues to rally, up +1.1% today and from the April lows is better by more than 18%.
- The FSE Straits Times in Singapore is an outlier, gaining +0.41% whilst the PSEi in the Philippines is one of the worst performers down -1.33%.
- The NIFTY 50 has given back yesterday's gains and is lower by -0.43%
OIL: Crude Down Through Today, IEA Forecasts Out Later
Oil prices took a step down at the start of today’s APAC trading after NBC reported that a top Iranian official said that the country would “commit to never making nuclear weapons” and “getting rid of its stockpiles of highly-enriched Uranium” in exchange for reduced sanctions. It has continued trending down through the session to be over 2% lower on the day.
- WTI is down 2.3% to $61.68/bbl off the intraday low of $61.36 but remains around 6% higher in May helped by hopes of a US-China trade deal which would improve the demand outlook. Brent is 2.3% lower at $64.60/bbl after falling to $64.32. Both benchmarks remain in a downtrend but well off initial support. The USD index is down 0.2% but unable to provide assistance to crude.
- CCIC Singapore has been sanctioned for inspecting Iranian crude shipments destined for China but not reporting them, as reported by Bloomberg. It signals that sanction-breaking shipments are being increasingly scrutinised as US President Trump has sounded tougher on Iran.
- The IEA’s April report is published later today. Its forecasts for the market tend to be less optimistic than OPEC’s and so it is likely to be watched closely.
- Later Fed Chair Powell speaks on the Framework Review and Barr also appears. In terms of data, US April retail sales, PPI, IP, May Philly Fed and jobless claims are released as well as Q1/March UK GDP, IP, trade, euro area Q1 preliminary GDP/employment and March IP. The ECB’s Cipollone, Elderson, de Guindos and BoE’s Dhingra also speak.
- Gold's safe haven status is unwinding at present, falling for fifth day out of seven.
- Gold is equally losing ground as bond market signals point to a declining probability of rate cuts.
- Losing ground by -0.98% to US$3,146.25 today takes gold below the 50-day EMA of $3,164.22
- Gold is up 21% year to date yet since the early May high of US$3,431.77 is down over 8%.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 15/05/2025 | 0600/0700 | ** |  GB | UK Monthly GDP |
| 15/05/2025 | 0600/0700 | ** | GB | Index of Services |
| 15/05/2025 | 0600/0700 | *** | GB | Index of Production |
| 15/05/2025 | 0600/0700 | ** | GB | Output in the Construction Industry |
| 15/05/2025 | 0600/0700 | *** | GB | GDP First Estimate |
| 15/05/2025 | 0600/0800 | ** |  NO | Norway GDP |
| 15/05/2025 | 0600/0700 | ** | GB | Trade Balance |
| 15/05/2025 | 0645/0845 | *** |  FR | HICP (f) |
| 15/05/2025 | 0700/0900 |  CH | Flash GDP | |
| 15/05/2025 | 0700/0900 |  EU | ECB's Cipollone at Payments Forum | |
| 15/05/2025 | 0750/0950 | EU | ECB's Elderson At Green Finance Conference | |
| 15/05/2025 | 0900/1100 | ** | EU | Industrial Production |
| 15/05/2025 | 0900/1100 | *** | EU | GDP (p) |
| 15/05/2025 | 1015/1215 | EU | ECB's De Guindos At ISDA Meeting | |
| 15/05/2025 | 1130/1330 | EU | ECB's Cipollone In Digital Currency Fireside Chat | |
| 15/05/2025 | 1215/0815 | ** |  CA | CMHC Housing Starts |
| 15/05/2025 | 1230/0830 | *** |  US | Jobless Claims |
| 15/05/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 15/05/2025 | 1230/0830 | ** | CA | Monthly Survey of Manufacturing |
| 15/05/2025 | 1230/0830 | ** | CA | Wholesale Trade |
| 15/05/2025 | 1230/0830 | *** | US | Retail Sales |
| 15/05/2025 | 1230/0830 | *** | US | PPI |
| 15/05/2025 | 1230/0830 | ** | US | Empire State Manufacturing Survey |
| 15/05/2025 | 1230/0830 | ** | US | Philadelphia Fed Manufacturing Index |
| 15/05/2025 | 1230/0830 | *** | US | Retail Sales |
| 15/05/2025 | 1240/0840 | US | Fed Chair Jerome Powell | |
| 15/05/2025 | 1300/0900 | * | CA | CREA Existing Home Sales |
| 15/05/2025 | 1315/0915 | *** | US | Industrial Production |
| 15/05/2025 | 1400/1000 | * | US | Business Inventories |
| 15/05/2025 | 1400/1000 | ** | US | NAHB Home Builder Index |
| 15/05/2025 | 1400/1500 | GB | BOE Dhingra At New Economics Foundation conference | |
| 15/05/2025 | 1400/1000 | * | US | Business Inventories |
| 15/05/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 15/05/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 15/05/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 15/05/2025 | 1800/1400 | *** |  MX | Mexico Interest Rate |
| 15/05/2025 | 1805/1405 | US | Fed Governor Michael Barr | |
| 16/05/2025 | 2350/0850 | *** |  JP | GDP |
| 16/05/2025 | 0430/1330 | ** | JP | Industrial Production |
| 16/05/2025 | 0730/0930 | EU | ECB's Cipollone At EU Cyber Resilience Board Meeting | |
| 16/05/2025 | 0800/1000 | *** |  IT | HICP (f) |
| 16/05/2025 | 0900/1100 | * | EU | Trade Balance |
| 16/05/2025 | 1230/0830 | * | CA | International Canadian Transaction in Securities |
| 16/05/2025 | 1230/0830 | *** | US | Housing Starts |
| 16/05/2025 | 1230/0830 | ** | US | Import/Export Price Index |
| 16/05/2025 | 1230/0830 | US | New York Fed's Roberto Perli | |
| 16/05/2025 | 1230/0830 | *** | US | Housing Starts |
