AUSSIE BONDS: Modestly Cheaper, RBA Gov Bullock In Parliament

The overnight range was 146.31-147.47, Asia is currently trading around 147.35. USD/JPY collapsed lower giving the support towards 146.00 a proper test, but it proved to be solid once again as the market looks towards the US inflation data this week. The price then very quickly retraced back to the middle of its 146-149 range once more. CFTC data shows leveraged funds again added a decent clip to their short JPY position last week so they will be hoping the inflation data this week keeps this support intact. A move back below 145/146 is needed to potentially start seeing these positions being flushed out.

• MNI US: For PPI, current Bloomberg consensus is for a cooling after July’s hot print, with M/M final demand PPI at 0.3% (0.9% prior) and “core” (ex-food/energy/trade) also at 0.3% (0.6% prior). Core PCE estimates are for 0.31% M/M vs 0.27% prior, with no analysts seeing core PCE printing above core CPI. That could change based on various PPI components that feed into PCE, but as it stands, the M/M core PCE estimate would be the highest since February.
• Given increasing focus on labor risks it’s hard to imagine a set of inflation readings that stops the Fed from cutting 25bp as expected, but it could help shape the updated rate and economic projections to be released at the meeting (including the 2025 “dot” median), as well as Chair Powell’s tone.
• “The political uncertainty from the Japanese Prime Minister’s resignation over the weekend will pile greater pressure on the bond market than the currency.” - BBG. 
• Options : Close significant option expiries for NY cut, based on DTCC data: 146.50($902m).Upcoming Close Strikes : 147.40($1.38b Sept 12), 150.00($1.11b Sept 11)  - BBG.
• CFTC data shows last week asset managers again added to their JPY longs after a consistent period of reduction +78427( Last +76761), leveraged funds though again used the dip to add a decent clip to their newly built short JPY position -66914(Last -52275). One of them is going to be wrong.

Fig 1 : USD/JPY Spot 2H Chart

Source: MNI - Market News/Bloomberg Finance L.P

• Bank of Korea to Sell KRW700bn 1-Year Bonds
• Vietnam To Sell VND 3.0Tln 2040 Bonds; (TD2540037)
• Vietnam To Sell VND 0.5Tln 2055 Bonds; (TD2555052)
• Vietnam To Sell VND 9.0Tln 2035 Bonds; (TD2535028)
• Vietnam To Sell VND 1.0Tln 2030 Bonds; (TD2530010)
• Thailand to Sell THB9bn of 2055 Bonds
• Thailand to Sell THB25bn of 2030 Bonds
• Bank Indonesia to Sell 32D SUVBI Bills
• Bank Indonesia to Sell 91D SUVBI Bills
• Bank Indonesia to Sell 181D SUVBI Bills
• Bank Indonesia to Sell 273D SUVBI Bills
• Bank Indonesia to Sell 367D SUVBI Bills
• China to Sell CNY149 bn 2030 Bonds
• China to Sell CNY35bn 2075 Bonds
• China to Sell CNY30bn 91-Day Bills
• India to Sell INR50bn 364-Day Bills 
• India to Sell INR60bn 182-Day Bills 
• India to Sell INR100bn 91-Day Bills 

source: Bloomberg Finance LP / MNI