AUSSIE BONDS: Modestly Richer After US Tsys Bull-Flatten

• Bank of Korea to Sell KRW500bn 91-Day Bonds
• South Korea to Sell KRW1.8tn 2-Year Bonds
• Philippines To Sell PHP 8.0Bln 91D Bills (PH0000058935)
• Philippines To Sell PHP 8.0Bln 182D Bills (PH0000059404)
• Philippines To Sell PHP 9.0Bln 364D Bills (PH0000060279)
• Singapore to Sell S$1.8 Billion Bonds Due 2054

The range Friday night was 143.23 - 144.04, a relatively quiet end to the week considering. Risk is attempting to find a base and move higher as the Trump administration moves to de-escalate tensions. This opens the consensus lower USD trade to further pressure but overall the market believes this could be fleeting and will look to add to shorts on any meaningful bounce.

• (Bloomberg) -- “President Donald Trump suggested Sunday that his sweeping tariffs would help him reduce income taxes for people making less than $200,000 a year, as public anxiety rises over his economic agenda.”
• US Treasury Secretary Bessent stated that US trade talks, especially with Asia are “moving along very well” in an interview with ABC.
• (Bloomberg) -- “Toyota Motor Corp. Chairman Akio Toyoda has proposed a buyout of Toyota Industries Corp., people familiar with the matter said, seeking to consolidate his grip on Japan’s biggest business empire as a wave of merger and acquisition activity roils the country.”
• On the day the 143 handle should continue to see some supply, then more importantly the 145/146 area should once more offer good levels for sellers to reengage. 
• CFTC data shows Asset managers continuing to add to JPY longs, leveraged funds are now also beginning to build longs.

Fig 1 : USD/JPY CFTC Holdings

Source: MNI - Market News/Bloomberg

In local morning trade, NZGBs have bull-flattened, with benchmark yields 1-6bps lower, after US tsys finished Friday ~8bp richer across the 2- to -10-year maturities. The local market was closed on Friday for the ANZAC Day holiday. 

• Headline risk trumped data ahead of the weekend, with US tsys extending session bests after Pres Trump tweeted he "Won't Drop China Tariffs Unless They Give Us Something", followed by "People Are Starting To Understand How Good Tariffs Are".
• Early Friday headlines, however, suggested some thawing in US-China relations. An interview with President Trump was published in which he said he and China's Xi had been in contact, while the Chinese were considering easing tariffs on some US imports.
• Gains in US tsys were pared slightly after higher than expected UofM sentiment & current conditions data. Overall 1Y inflation expectations were revised to 6.5% (prelim 6.7%) in the final April release for a still large acceleration from 5.0% in March and its highest since 1981.
• Swap rates are 2-5bps lower, with the 2s10s curve flatter.
• RBNZ dated OIS pricing is slightly softer across meetings. 27bps of easing is priced for May, with a cumulative 81bps by November 2025.
• Today, the local calendar will be empty.