OIL: Oil in Weekly Decline as Brent Challenges Key Technical
Oct-31 04:05
- If current trends remain, oil will register it's fourth week in October of declines, locking in over -2% this week.
- WTI has weakened further Friday paring back the modest gains of Wednesday and Thursday, to be down -0.70% in the Asia trading day.
- Mid week gains had pushed WTI above the 20-day EMA of US$60.36 bbl, which it has given back today as it falls back to US$60.14.
- Brent is lower by -0.62% today at US$64.60 bbl, and down just over 2% for the week. Brent has fallen back near to the 20-day EMA of $64.44 and further falls tonight could see it consolidate below with near term lows of US$61.10 below.
- With no new news on further Russian sanctions or discussions with India on their Russian purchases although earlier in the week India Oil Corp stated clearly of their intent to stop buying oil under the sanctions. Other refiners have followed suit pausing all purchases.
- Similarly the mid week change in tact from the FED weighed heavy on oil just as the International Energy Agency has warned that the surplus in 2026 will be a record, though Saudi Aramco has struck a more positive tone. Oversupply in 2026 is a "highly credible scenario," Shell Plc CEO Wael Sawan said in an earnings call Thursday. (per BBG)
- The CEO of Europe's largest refiner TotalEnergies said overnight that " am more bullish than what we wrote a few days ago because I begin to realize that these sanctions will have a real impact in this market and that markets are underestimate what that mean."
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JGBS: Cash Bonds Little Changed At Lunch
Oct-01 03:13
At the Tokyo lunch break, JGB futures are stronger, +11 compared to settlement levels.
- The Q3 Tankan survey printed in line with expectations and Q2 but FY25 capex intentions increased 1pp to 12.5%. Large company business conditions have been moving sideways at a solid level since the start of last year, especially for the non-manufacturing sector.
- The large manufacturers' index rose 1 point to 14 in Q3 while the outlook for Q4 is forecast to deteriorate 2 points. The series has not been affected by new US tariffs and the 2025 average is slightly higher than 2024's.
- Non-manufacturers' conditions were steady at 34, well above the series average of +7.3, with the outlook at 28.
- Small non-manufacturers are also outperforming manufacturers with the index at 14 (down 1 point) compared to +1 (stable). The outlook for both sectors improved 1 point.
- The September BoJ summary of opinions showed a bias towards a resumption of tightening.
- (Bloomberg) Japan will get its second prime minister in just over a year when the ruling Liberal Democratic Party holds a leadership election on Oct. 4.
- Cash US tsys are slightly mixed, with a steepening bias, in today's Asia-Pac session after yesterday's modest twist-steepener.
- Cash JGBs are little changed across benchmarks.
- Swap rates are flat to 1bp lower, with a steepening bias. Swap spreads are mixed.
AUSSIE BONDS: Holding Cheaper, Market Continues To Price Out RBA Cut
Oct-01 01:48
ACGBs (YM -4.0 & XM -5.5) remain weaker.
- S&P Global PMI Manufacturing Index falls to 51.4 from 53 in Aug.
- Cash US tsys are slightly cheaper in today's Asia-Pac session after yesterday's modest twist-steepener.
- Cash ACGBs are 4-7bps cheaper with the AU-US 10-year yield differential at +22bps.
- The latest ACGB Dec-34 supply achieved a weighted average yield that printed 0.40bp through prevailing mids (per Yieldbroker). However, the cover ratio decreased to 2.1033x, thelowest since its debut in 2023, from 3.1708x.
- The bills strip is -4 to -6 beyond the first contract.
- RBA-dated OIS pricing has firmed modestly across meetings following yesterday’s RBA Policy Decision. Pricing across meetings is 1-4bps firmer than yesterday’s pre-RBA levels. Notably, this post-RBA move leaves pricing some 10-19bps firmer than last Wednesday’s pre-CPI levels.
- A 25bp rate cut in October is given a 35% probability, with a cumulative 11bps of easing priced by year-end.
STIR: RBA Dated OIS’ Firming Since August CPI Extends After RBA Decision
Oct-01 01:34
RBA-dated OIS pricing has firmed modestly across meetings following yesterday’s RBA Policy Decision.
- At the time of writing, pricing across meetings was 1-4bps firmer than yesterday’s pre-RBA levels.
- Notably, this post-RBA move leaves pricing some 10-19bps firmer than last Wednesday’s pre-CPI levels.
- A 25bp rate cut in October is given a 35% probability, with a cumulative 11bps of easing priced by year-end.
Figure 1: RBA-Dated OIS – Current Vs. Pre-CPI
Source: Bloomberg Finance LP / MNI
