INDIA: PMI Preview

JGBS will open for the first time today since the weekend’s elections.

• In post-Tokyo trade on Friday, JGB futures closed weaker, -31 compared to settlement levels.
• Overnight, multiple factors helped US tsys extend their rally into a 4th day. However, a survey of various desks suggested a specific catalyst couldn't really be identified, with no tier 1 data or FOMC speakers (pre-meeting blackout period) on the docket.
• A decline in oil prices helped bring breakevens lower, with reports of a potential Russia-Ukraine meeting applying downside pressure.
• Some cited reports of potential trade tension between the US and EU ahead of the White House-imposed Aug 1 deadline for a deal. This appeared to boost EGBs in early trade, and later US tsys may have benefited from a flight to quality, though the broader move couldn't quite be squared with the pickup in equities and the Euro.
• The Japanese House of Councillors Election had a roughly as-expected outcome, helping global core FI in a relief rally (though we will know more when Japanese bond markets return from holiday).
• Today, the local calendar will be empty, ahead of tomorrow’s 40-year supply.

ACGBs (YM +1.5 & XM +2.5) are moderately stronger after US tsys finished Monday with gains.

• Multiple factors helped US tsys extend their rally into a 4th day. However, a survey of various desks suggested a specific catalyst couldn't really be identified, with no tier 1 data or FOMC speakers (pre-meeting blackout period) on the docket.
• Cash ACGBs are 2bps richer with the AU-US 10-year yield differential at -8bps.
• The bills strip is stronger, with pricing flat to +2.
• RBA-dated OIS pricing is slightly softer across meetings today. A 25bp rate cut in August is given a 100% probability, with a cumulative 65bps of easing priced by year-end (based on an effective cash rate of 3.84%).
• Today, the local calendar will be empty, ahead of the RBA Minutes for the July Meeting tomorrow. Governor Bullock is speaking at the Anika Foundation lunch on Thursday. Both will be monitored for further information on what lies behind the unexpected decision to hold and the central bank's thinking following the disappointing June jobs data.
• A new 21 October 2036 Treasury Bond is planned to be issued via syndication this week (subject to market conditions).

In local morning trade, NZGBs are 2bps richer after US tsys finished Monday with gains. 

• Multiple factors helped US tsys extend their rally into a 4th day, though a survey of multiple desks suggested a specific catalyst couldn't really be identified.
• A decline in oil prices helped bring breakevens lower, with reports of a potential Russia-Ukraine meeting applying downside pressure.
• Some cited reports of potential trade tension between the US and EU ahead of the White House-imposed Aug 1 deadline for a deal.
• NZ trade surplus narrowed to NZ$142m in June from a revised +NZ$1.082b in May.
• "Westpac noted that the decline in core inflation observed over the past year has stalled this quarter, but with most measures still a bit above 2%, inflation will need to be watched closely in the coming months, Westpac added."  (BBG)
• Swap rates are 1-3bps lower, with a flatter 2s10s curve.
• RBNZ-dated OIS pricing remains little changed across meetings. 21bps of easing is priced for August, with a cumulative 38bps by November 2025.
• On Thursday, the NZ Treasury plans to sell NZ$225mn of the 3.0% Apr-29 bond, NZ$175mn of the 2.75% Apr-37 bond and NZ$50mn of the 5.0% May-54 bond.