BONDS: NZGBS: Poor Weekly Auction & ACGB Sell-Off Weighs

Oil prices are slightly higher but have been trading within a narrow range during today’s APAC session with no new developments to give it direction. Later on Tuesday though, the IEA’s October report, US industry-based inventory data and Fed Chair Powell comments on the economy have the potential to move crude. Brent is up 0.4% to $63.56/bbl off the intraday low of $63.41 following a peak of $63.63. WTI is 0.4% higher at $59.72/bbl after reaching $59.82. The USD index is slightly lower.

• OPEC left its oil market outlook unchanged with demand forecast to rise by 1.3mbd in 2025 and 1.4mbd in 2026. The IEA releases its monthly report Tuesday and tends to be less optimistic than OPEC. It has been projecting a record market surplus for 2026.
• US-China working-level trade talks occurred on Monday and China reiterated today its right to control rare earth exports and that the US should negotiate. Oil is likely to sell off if there is any deterioration in the situation as it remains concerned about the impact on energy demand from increased protectionism.
• Later Fed Chair Powell speaks on the economic outlook and monetary policy. The Fed’s Bowman, Waller and Collins, ECB’s Machado, Cipollone and Donnery, and BoE’s Bailey and Taylor also appear. US September NFIB small business optimism, UK labour market data and German September HICP and euro area October ZEW print. 

With Japan back today playing catch up from yesterday's weakness, most key markets in the region have moved lower Tuesday.  This comes despite the better global risk tones on Monday, as Trump softened his language around China (after tariff threats late on Friday).  

Having closed at new highs Thursday, the NIKKEI's falls started Friday on apparent profit taking which was then over ran by Trump's comments as risk appetite declined.  Out yesterday for a public holiday, Japanese investors continued to sell today taking the NIKKEI lower by -1.30%.

In Hong Kong the Hang Seng fell -0.45% today, despite trying to open stronger and traded through the 50-day EMA of 25,886.  Were the HSI to hold below the 50-day EMA it would be the first time since the trade war induced sell off from April which then resulted in a near on five month rally to new highs.  Other key Chinese bourses did little holding near to opening levels.  

The KOSPI was a regional exception jumping +0.50% today as the 19% constituent - Samsung - beat profit estimates for its most recent quarter and its biggest quarterly profit in three years.  

Following a terrible end to September for the NIFTY 50, it has rallied seven out of nine trading days in October.  Against the regionally weak backdrop yesterday, the NIFTY 50's fall of -0.23% was a relative outperformance and in opening trade Tuesday it has recovered yesterday's falls.  

Gold has continued to rally today despite a flat US dollar, 2-year yields and S&P e-mini as it appears to be carried by momentum with no new fresh catalysts. It is now up 7.8% in October and currently 1.3% higher at $4164.0/oz today, around the record high of $4164.24, above resistance at $4161.7. US-China working-level trade talks occurred on Monday and China reiterated today its right to control rare earth exports and for the US to negotiate. Gold & silver are looking even more stretched.

• After rising over 4% on Monday, silver continued to rally Tuesday driven by momentum and significant liquidity issues in London. The metal is up 1.6% to $53.20 today after an all-time high of $53.465 earlier in the APAC session, above the fourth resistance level at $52.689, a Fibonacci projection. It is now up over 14% this month.
• Societe Generale revised up its gold forecast to $5000/oz for end-2026, according to Bloomberg, due to strong ETF and central bank flows, which had exceeded its expectations.
• The ongoing US government shutdown is also supporting precious metals with no apparent progress to end the impasse. Wednesday military personnel will miss their first pay but President Trump has said money will be found. It would be the first time in modern US history if it occurs.
• US September CPI was scheduled for 15 October but has now been delayed to 24 October contributing to difficulty in gauging where the economy is ahead of the 29 October Fed decision.
• Later Fed Chair Powell speaks on the economic outlook and monetary policy. The Fed’s Bowman, Waller and Collins, ECB’s Machado, Cipollone and Donnery, and BoE’s Bailey and Taylor also appear. US September NFIB small business optimism, UK labour market data and German September HICP and euro area October ZEW print.