SINGAPORE: Non-Oil Domestic Exports Up +13% YoY vs est. +5.0% YoY

The Australian Office of Financial Management (AOFM) will today sell A$300mn of the 4.75% 21 June 2054 Treasury Bond. The line was last sold on 6 May 2025 for A$300mn. The sale drew an average yield of 4.9633%, at a high yield of 4.9700% and was covered 2.4833x. There were 57 bidders, 26 of which were successful and 26 were allocated in full. The amount allotted at the highest yield as a percentage of the bid at that yield was 100%.

• This week's ACGB supply is at the top end of the recent average weekly issuance of $1500-2000mn, with A$900mn of the 2.75% 21 June 2035 bond on Wednesday and A$800mn of the 1.00% 21 December 2030 bond on Friday.
• According to the Budget 2025-26 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance of Treasury Bonds (including Green Treasury Bonds) in 2025-26 is expected to be around $150 billion. Issuance of Treasury Indexed Bonds by tender is expected to be between $2 billion and $3 billion (additional issuance by syndication may be considered).
• For 2024-25, issuance of Treasury Bonds has been revised to around $100 billion, including around $2 billion of Green Treasury Bonds. Treasury-Indexed Bond issuance will be around $3 billion.
• Results are due at 0200 BST / 1100 AEST.

European natural gas rose to EUR 39.61, the high for June, on Monday following Israeli attacks on Iran’s Fajr Jam Gas Refinery and South Pars gas field, which is one of the largest in the world. Prices then trended lower to EUR 37.34 and finished up 0.25% to EUR 37.99 to be 11% higher this month. Energy prices moderated following news that Iran wanted to resume negotiations on a nuclear deal and to keep the US out of its conflict with Israel but strikes by both sides have continued. 

• US President Trump commented that Iran should have signed a nuclear deal when it had the chance and that people should evacuate Tehran. This has boosted oil prices during today’s APAC session with WTI currently up 2.0% to $73.20/bbl.
• European prices are likely to remain sensitive to developments in the region given its reliance on global supplies and significant refilling needs. The risk remains that shipping through the Strait of Hormuz, which sees around 20% of global LNG exports, is closed. Shipments in the area are already being disrupted with new orders being put on hold.
• Bloomberg reported that today the European Commission will propose a plan to end the EU’s reliance on Russian gas by end 2027. It would be gradual starting in January 2026 and would also include a ban on services to Russian companies at EU LNG terminals.
• US gas jumped 4.5% to $3.74 on Monday to be up 8.5% in June. The move was driven by forecasts for warmer weather towards the end of the month with the eastern US expected to experience a heatwave, according to Atmospheric G2, thus increasing the prospect of higher cooling demand. 

Monthly price data was mixed in May with food, power, accommodation and alcohol seeing a rise in inflation, while air travel, rents and petrol fell. The series released account for 46.5% of the quarterly CPI with Q2 due to be released on July 21, which the RBNZ expects to rise 0.5% q/q & 2.6% y/y. June monthly indices print earlier on July 17. RBNZ and NZIER compiled consensus accept a near-term pick up in inflation but continue to have it returning to the mid-point of the 1-3% target band. 

• Food prices rose 0.5% m/m to be up 4.4% y/y up from 3.7% y/y in April. They have been trending higher since the June 2024 trough of -0.3% y/y. There has been a sharp increase in annual dairy and beef inflation. Groceries fell 0.7% m/m to be steady at 5.2% y/y in May.

NZ inflation y/y%

• Existing rents rose 0.1% m/m to be up 2.8% y/y, lowest rate in over 10 years and a moderation from April’s 3.0%. They have been trending lower since reaching 4.6% y/y in May 2024.
• Petrol prices fell 2.7% m/m, the fourth consecutive monthly decline, to be down 9.4% y/y after -9.2% in April. This component should put downward pressure on Q2 headline inflation.

NZ inflation y/y%

Source: MNI - Market News/Statistics NZ

• Power prices were higher though with electricity up 2.3% m/m & 8.7% y/y after 6.2% y/y and gas +0.7% & 15.4% down slightly from April’s 15.8%. They have been trending higher since November and August 2024 respectively.
• Both domestic and overseas air travel were down sharply in May after a strong rise in April to be down on the year, but accommodation rose to be 5.6% y/y higher up from 4.4%.