JGBS: Positive Bias For Futures, Key Resistant Intact, BoJ Near Flat For Oct

ACGBs (YM -2.0 & XM -1.5) are modestly weaker after US tsys finished 2-3bps cheaper.

• MNI FED: Cleveland's Hammack: Policy Very Mildly Restrictive, Concerns On More Cuts. Cleveland Fed President Hammack (hawk, 2026 FOMC voter) sounds extremely cautious about making further cuts: "I am laser focused on inflation. And that's why to me, I think that we should be very cautious in removing monetary policy restriction, because I think it's important that we stay restrictive to bring inflation back down to target.
• There will be no cash US tsy trading in Asia-Pac today with Japan out.
• S&P Global Sept. Flash PMIs have printed: Mfg PMI 51.6 vs 53 Prior; Composite 52.1 vs 55.5 Prior; and Services 52.0 vs 55.8 Prior".
• Cash ACGBs are 3bps cheaper with the AU-US 10-year yield differential +13bps.
• The bills strip is -2 to -3 across contracts.
• RBA-dated OIS pricing is giving a 25bp rate cut in September a 4% probability, with a cumulative 25bps of easing priced by year-end (based on an effective cash rate of 3.60%).
• This week, the AOFM plans to sell A$300mn of the 4.75% 21 June 2054 bond today, A$1000mn of the 3.00% 21 November 2033 bond on Wednesday and A$900mn of the 2.75% 21 November 2029 bond on Friday.

In local morning trade, NZGBs are unchanged despite US tsys finishing yesterday’s session with moderate losses. 

• Headlines have crossed from BBG that the new RBNZ Governor could be announced tomorrow. BBG note: "New Zealand is set to appoint a woman to head its central bank for the first time as it seeks to refresh an institution damaged by leadership turmoil.", while also noting the new Governor was expected to come from offshore (i.e. was not a New Zealander).
• The appointment comes at a time after recent upheaval for the RBNZ. Governor Orr left the post abruptly in March, while Chair of RBNZ board, Neil Quiqley also left recently. Last week's Q2 GDP data was weaker than market and RBNZ forecasts, driving further easing expectations in terms of the market outlook.
• Swap rates are little changed.
• RBNZ dated OIS pricing is little changed across meetings. 33bps of easing is priced for October, with a cumulative 59bps by November 2025.
• The local calendar will be empty until Friday's Consumer Confidence data.
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond and NZ$200mn of the 3.50% Apr-33 bond.

• Oil had posted reasonable gains in the Asia trading day, only to give them back and finish marginally down by the US close.  
• Europe's focus on Russian oil flows is creating uncertainty for markets as new sanctions come into place, targeting Indian and Chinese buyers of Russian oil.  
• Investors were left to try to assess the impact of Ukraine strikes on Russian oil infrastructure, a move likely to interrupt supply.  
• Since the announcement of further supply by OPEC+ it has dampened volatility in oil markets with both WTI and Brent trading in narrow ranges.  
• Iraq has announced that they have finally struck a deal with Kurdistan to resume oil exports with as much as 200,000 bbl / day potentially hitting the market, having had exports halted for over pay disputes, stopping shipments for nearly two years.  
• WTI finished the US trading session down -0.06% at US$62.14, having been as high as $63.18 earlier.  
• Brent closed lower by -0.16% at $66.57 and maintains its position below all major moving averages. 

• Gold finished the US trading day, just off recent highs at US$3,741.85, a fall of -0.13%.  
• Gold is buoyed by the cut in US rates and is having one of the strongest months of the year, up over 8% already.  
• Gold closed Monday at new highs of US$3,746.70, having ended 2024 at $2,624.50.
• The bullish momentum is evident with all major moving averages upward sloping as gold remains above them all.  
• Flows into golf ETFs remains strong with investors chasing the tail of strong performance and potentially betting on further rate cuts.  
• Zijin Gold International Co's IPO next week in Hong Kong is at risk as the Super Typhoon Ragasa approaches, threatening to close all markets.