AUSSIE BONDS: Modestly Cheaper, Subdued Session, Jun-35 Supply Tomorrow
ACGBs (YM -2.0& XM -3.5) are modestly weaker, with trading relatively subdued.
- There was a $4bn widening in Australia’s merchandise trade surplus in March after narrowing $2.5bn in the previous month. The move to the highest surplus at $6.9bn in over a year was driven by a strong pickup in goods exports driven by Australia’s mining commodities, while imports contracted on the month. Through the volatility though, the trend in the trade surplus is steady.
- Opinion polls continue to point to a return of the incumbent Labor government following Saturday’s federal election but it remains unclear whether it can hold onto its majority, which is likely to depend on developments in a number of individual seats.
- Cash ACGBs are 1-3bps cheaper with the AU-US 10-year yield differential at +2bp.
- Cash US tsys are dealing ~2bps cheaper in today's Asia-Pac session.
- The bills strip is little changed.
- RBA-dated OIS pricing is slightly firmer across meetings today. A 50bp rate cut in May is given a 4% probability, with a cumulative 112bps of easing priced by year-end (based on an effective cash rate of 4.09%).
- Tomorrow, the AOFM plans to sell A$1200mn of the 2.75% 21 June 2035 bond.
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BOBL TECHS: (M5) Short-Term Bull Cycle Remains In Play
- RES 4: 119.040 High Feb 28 and a key resistance
- RES 3: 118.950 High Mar 4
- RES 2: 118.382 76.4% retracement of the Feb 28 - Mar 6 sell-off
- RES 1: 118.200 High Mar 31
- PRICE: 117.740 @ 05:47 BST Apr 1
- SUP 1: 117.470 20-day EMA
- SUP 2: 117.080 Low Mar 25 and a ey short-term support
- SUP 3: 116.800 Low Mar 17
- SUP 4: 116.470 Low Mar 12
Bobl futures traded to a fresh short-term cycle high yesterday, before retreating. The contract has breached 117.974, the 61.8% retracement of the bear leg between Feb 28 - Mar 6. The break strengthens the current bull cycle and paves the way for a climb towards 118.382, a Fibonacci retracement. On the downside, initial support to watch lies at 117.470., the 20-day EMA. Key short-term support is at 117.080, the Mar 25 low.
ASIA STOCKS: A Better Day for Stocks as China Leads the Rally.
China Vanke, often viewed as a bellwether for the property sector saw shares up +2.5% in Hong Kong despite missing earnings.
Following the lifting of a ban on short selling, global funds accounted for 90% of the short sales in stocks on the KOSPI on Monday according to exchange data.
Foreign outflows in Taiwan continue unabated and has seen over $3bn leave the market in the last five trading days.
A better day in general for Asian bourses as China’s markets performed well across the board, giving impetus to others.
- China’s Hang Seng lead the way rising +1.06%, gradually pushing it into positive territory over the last five days. The CSI 300 is up +0.29%, Shanghai Comp +0.59% and Shenzhen up +0.90%.
- Taiwan's TAIEX is up strongly despite the outflows, rising by +2.53% for its strongest day since early January.
- Following yesterday’s declines the KOSPI has roared today, rising by +1.94% spurred on by positive economic data releases.
- Having been closed yesterday, Singapore’s Straits Times is playing catch up on yesterday’s regional falls, down -0.20% whilst the Philippines is up for a second day by +0.54%.
- India’s NIFTY 50 has enjoyed a strong period of gains, but is giving back at this morning’s open, down -0.25%.
EURUSD TECHS: Trend Condition Remains Bullish
- RES 4: 1.1083 High Oct 2 2024
- RES 3: 1.1040 High Oct 4 2024
- RES 2: 1.0961 76.4% retracement of the Sep 25 ‘24 - Feb 3 bear leg
- RES 1: 1.0861/0955 High Mar 21 / 18 and the bull trigger
- PRICE: 1.0826 @ 05:58 BST Apr 1
- SUP 1: 1.0733 Low Mar 27 and a key short-term support
- SUP 2: 1.0656 50-day EMA and a short-term pivot level
- SUP 3: 1.0602 Low Mar 5
- SUP 4: 1.0548 50.0% retracement of the Feb 3 - Mar 18 bull run
The trend condition in EURUSD is bullish and recent weakness appears to have been a correction. MA studies are in a bull-mode position highlighting a dominant uptrend. 1.0733, the Mar 27 low, marks a key near-term support. A move through it would confirm a clear breach of the 20-day EMA and signal scope for a deeper correction towards the 50-day EMA at 1.0656. Key resistance and the bull trigger is 1.0955, the Mar 18 high.
