BONDS: NZGBS: Typical Subdued Pre-US Payrolls Friday Session
NZGBs closed little changed, with benchmark yields flat to 1bp higher, after a subdued pre-US payrolls Friday session.
- (Bloomberg) -- Smaller economies including New Zealand, Costa Rica and Bolivia saw US import tariffs rise to 15% — up from the 10% baseline released on April 2 — as part of a sweeping effort to penalize countries running trade surpluses with the US.
- Cash US tsys are slightly mixed, with a steepening bias, in today’s Asia-Pac session.
- Today’s US calendar will see: NFP, S&P Global Man PMI, ISM Manufacturing, Construction Spending, U. of Mich. Sentiment.
- Swap rates closed 1bp lower to 1bp higher, with a steeper 2s10s curve.
- RBNZ dated OIS pricing closed little changed across meetings. 21bps of easing is priced for August, with a cumulative 34bps by November 2025.
- On Monday, the local calendar will be empty, ahead of Commodity Prices on Tuesday, and the Q2 Employment Report and House Prices on Wednesday.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JPY: Asia Wrap - Quiet Session, Trades Sideways
The Asia-Pac USD/JPY range has been 143.32 - 143.75, Asia is currently trading around 143.60, +0.15%. USD/JPY has traded sideways in our session. This pair continues to trade with an offered bias, first resistance is back towards 144.50/145.00 and there should be sellers again eager to participate towards that level. The market will be waiting for NFP on Thursday to provide a potential catalyst to test the 142.00/140.00 area once more.
- (Bloomberg) -- “Japan will continue actively negotiating tariffs in good faith with the US for both countries' mutual benefit, Deputy Chief Cabinet Secretary Kazuhiko Aoki says at a regular press conference on Wednesday.”
- “Japan's super-long bonds are set to remain under pressure in the medium term as local life insurers may offload holdings to sidestep impairment losses on deeply discounted debt.” (per BBG)
- "ISHIBA: TALKS WITH US SEEM MORE ABOUT INVESTMENT THAN TARIFFS” - BBG
- The rejection of 148.00 points to a potential top being in place now and shows just how quick the market is to return to selling USD’s. USD/JPY is looking for a fresh catalyst to probe the lower end of its range again, can the NFP on Thursday provide that ?
- Options : Close significant option expiries for NY cut, based on DTCC data: 144.00($598m), 144.75(698m).Upcoming Close Strikes : 140.00($1.04b July3).
Fig 1 : USD/JPY Spot Hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUD: Asia Wrap - Disappointing Retail Data Finds Bids Around 0.6560
The AUD/USD has had a range of 0.6565 - 0.6583 in the Asia- Pac session, it is currently trading around 0.6583. The pair tested lower on the back of a lower than expected retail sale sprint, bids emerged back around 0.6560 and the pair has erased all of its losses going into London. US Equity futures have drifted higher in Asia, ESU5 +0.30%, NQU5 +0.35%. The market will be watching for signs of this move building upward momentum for a more significant move higher, could the catalyst be NFP on Thursday ?
- Australian retail sales rose a modest 0.2%m/m in May, after a revised flat outcome in April (originally reported as a -0.1% dip). The market consensus for the May outcome was a +0.5% rise. Other data showed May building approvals up 3.2%m/m, which was slightly below the 4.0% forecast. The April fall was revised to -4.1%m/m.
- (Bloomberg) -- Weak retail sales confirm our concerns about Australia’s consumers, who are keeping their wallets shut despite the Reserve Bank starting rate cuts in February and May. So far, there’s little sign the moves are reviving spending, and a stronger rebound likely hinges on additional easing.
- The AUD/USD is breaking through the top of its recent range as the pressure on the USD increases. First support is seen back towards 0.6500.
- The AUD needs a sustained break above 0.6550/0.6600 to potentially start building momentum for an extended move higher, a close back above 0.6600 and the focus would turn back to 0.6900/0.7000.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6550(AUD654m). Upcoming Close Strikes : 0.6600(AUD2.55bm July4).
- AUD/JPY - Today's range 94.30 - 94.53, it is trading currently around 94.50, +0.1%. Choppy price action as the pair establishes a range between 92.00 - 96.00. Momentum higher seems to be stalling, a break sub 0.9350 would be needed to see the focus turn lower once more.
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
US TSYS: Asia Wrap - Yields Drift Higher
The TYU5 range has been 111-27 to 111-30+ during the Asia-Pacific session. It last changed hands at 111-27, down 0-00+ from the previous close.
- The US 2-year yield has drifted higher trading around 3.776%.
- The US 10-year yield has edged higher trading around 4.25%, up 0.01 from its close.
- The 10-year yield has seen a bounce after a very strong move lower with some paring back of longs ahead of NFP. Any bounce back to the 4.35% area would offer buyers a decent level to add again.
- (Bloomberg) - “Jerome Powell repeated that the Fed probably would have cut rates further this year absent Trump’s expanded use of tariffs, although he didn’t rule out easing at July’s meeting.”
- “The $3.3 trillion US tax and spending bill passed the Senate after JD Vance cast the tie-breaking vote. The House is expected to vote on the package Wednesday, but passage isn’t guaranteed.”(BBG)
- Data/Events: MBA Mortgage Applications, ADP, Challenger Job Cuts
Fig 1: 10-Year US Yield Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
