AUSSIE BONDS: Modestly Mixed, Subdued Session, US Holiday Mon, CPI On Wed

NZGBs closed slightly cheaper, with benchmark yields 1-2bps cheaper. With the local calendar light today, the domestic market has focused its attention abroad. 

• Risk-on sentiment extended into today's Asia-Pac session after US President Trump stated that he had no intention of firing Fed Chair Powell.
• Trump also stated that the final tariff number for China wouldn't be near the current 145%. He also expressed optimism around trade deals with lots of countries and spoke of the large investment agreements reached for flows into the US.
• Cash US tsys have twist-flattened in today's Asia-Pac session, with yields 2bps higher to 8bps lower.
• The NZ–US 10-year yield differential widened by 6bps to +14bps. This places the spread roughly where it was in early March, though it's about 20bps narrower than its levels in early April.
• Swap rates closed flat to 3bps higher, with the 2s10s curve flatter.
• RBNZ dated OIS pricing closed flat to 3bps firmer across meetings, with late 2025 leading. 27bps of easing is priced for May, with a cumulative 80bps by November 2025.
• Tomorrow, the local calendar will see ANZ Consumer Confidence.
• The NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond and NZ$250mn of the 4.25% May-36 bond tomorrow.

Oil prices have continued trending higher during APAC trading as risk appetite improved in relief following President Trump’s comments that he wouldn’t sack Fed Chair Powell and that China’s tariffs would finish below the current 145%. China is the world’s largest importer of crude. The USD index is off today’s high but still up 0.2%.

• WTI is 0.9% higher today to $64.23/bbl after a peak of $64.48 and is now up slightly this week but still down sharply in April. Brent is up 0.8% to $67.98 with gains above $68.00 unsustained but is currently steady on the week. The prompt spread structure is in bullish backwardation, according to Bloomberg.
• With demand/supply concerns persisting, US inventory data remain in focus. US industry-based figures showed a sharp drawdown in crude and both gasoline and distillate, suggesting demand remains solid which has contributed to today’s higher oil prices. The official EIA data is out later today.
• Significant uncertainty around the outlook for Iran’s oil exports persists after the US Treasury said there would be stricter enforcement of sanctions and introduced measures against an LPG magnate with a large shipping fleet. Iran’s foreign minister is headed to China following recent talks with the US. China is the main buyer of its oil.
• Later there is more Fedspeak with Goolsbee, Musalem, Waller, Hammack and Kugler appearing. US preliminary April S&P Global PMIs, March housing data and the Fed’s Beige Book are released. European April PMIs and euro area February trade print.
• The IMF/World Bank & G20 finance ministers/central bank governors meetings take place. The ECB’s Lane and Cipollone participate in panels and BoE’s Bailey and Breeden also appear, while BoE’s Pill speaks at another event. 

Gold made lows just under $3316 in the first part of trade, where liquidity was lighter amid strong USD gains. We stabilized since then but found selling interest above $3386. We last racked near $3340, still off 1.20% for the session. 

• Gold has been moving in lock step with USD weakness recently, so it no surprise that we have corrected lower for bullion as USD sentiment has stabilized. Trump remarks, particularly around having no intention to fire Fed Chair Powell, has aided USD sentiment, but we sit off earlier highs though for the BBDXY index (last under 1224).
• Gold is still in a technical bullish uptrend though. Focus will be on re-testing $3500 on the upside. Initial firm support lies at $3163.5, the 20-day EMA.