BONDS: NZGBS: Closed On A Strong Note, Tracking US Tsys & ACGBs

ACGBs (YM +3.0 & XM +4.0) are stronger on a local-data-light Sydney session with cash US tsys closed for Memorial Day.

• US equity-index futures climbed in today's Asian session after President Donald Trump extended a deadline on aggressive European tariffs. Trump agreed to delay the date for a 50% tariff on goods from the European Union to July 9 from June 1.
• Analysis by Goldman Sachs shows short interest in the median S&P 500 stock – that is, the percentage of investors betting the stock will fall - has jumped to its highest reading since August 2019, according to Goldman’s US guru, David Kostin. (per BBG)
• US tsy futures (TYM5) have weakened in today's Asia-Pac dealings, with TYM5 at 109-27+, -0-07 from closing levels.
• Cash ACGBs are 3-4bps richer.
• The bills strip has bull-flattened, with pricing +1 to +5.
• RBA-dated OIS pricing is 2-6bps softer across meetings today, with early 2026 leading. A 25bp rate cut in July is given a 72% probability, with a cumulative 73bps of easing priced by year-end.
• Tomorrow, the local calendar will be empty ahead of April CPI data on Wednesday.  
• The AOFM plans to sell A$400mn of the 4.25% 21 June 2034 bond tomorrow, with A$1200mn of the 4.25% 21 March 2036 bond on Friday.

Chinese electric vehicle stocks fall in Hong Kong on investors concern over intensifying sector competition after leader BYD announced price cuts for some mass-market models.  BYD drops over 7% in Hong Kong; Geely Auto -7%, Great Wall -5%, Li Auto -4.8%, Xiaomi -2%, Nio -2%, Xpeng -2%.  This comes as Citigroup expects Xiaomi’s new YU7 SUV to be priced in the 250,000 yuan-320,000 yuan range with monthly sales at about 30,000 units, and “significantly erode” Tesla model-Y’s China market share.

• The declines in Hong Kong led broader moves in China.  The Hang Seng fell -1.00%, the CSI 300 0.75%, Shanghai Comp -0.30% and Shenzhen -0.37%
• The KOSPI is the region's outperformer as politicians vying for the leadership tout further stimulus and the BOK meets this week and is expected to cut.  The KOSPI has jumped +1.30% today.  
• In what continues to be a challenging period, the FTSE Malaysia KLCI shrugged off Friday's gains to return to the recent downward trend, falling -0.20% today.  
• The Jakarta Composite fell today by -0.93% yet remains in a bullish period with only seven down days since the begging of April and strong foreign inflows.
• The FTSE Straits Times is down -0.45% and the PSEi in the Philippines down -0.38%.  
• The NIFTY 50 is up +0.78% and is building on what was modest but positive week last week for returns.  

Gold prices are moderately lower during today’s APAC session after rising close to 2% on Friday. They are down 0.2% to $3350.20/oz but off the intraday low of $3331.62 which followed some pullback in safe-have flows after news that the US and EU would continue to work towards a trade deal and the threat of a 50% US tariff on June 1 was postponed until July 9. The USD index is down 0.2%.

• Despite today’s lower gold price due to the better risk tone following more positive trade talk, it is likely to continue to find support from the US given ongoing trade negotiations are likely to be bumpy. There are also concerns over the fiscal position after the House passed the tax bill which now faces the Senate. Global relations remain fraught especially in the Middle East and Russia/Ukraine.
• Regional equities are mixed with the Hang Seng down 1.0% but KOSPI up 1.3% and S&P e-mini +1.0%. Oil prices are slightly higher with WTI +0.4% to $61.76/bbl. Copper is up 0.8% but iron ore is down to around $97/t. Silver has been range trading and is little changed.
• The US and UK are closed today for holidays. ECB President Lagarde speaks later.