AUSSIE BONDS: Post-RBA Weakness Remains
ACGBs (YM -4.0 & XM -3.0) are weaker, having extended yesterday’s post-RBA sell-off. ACGB futures are 3-7bps weaker than yesterday’s pre-RBA levels, with a flatter curve. Nevertheless, futures remain above yesterday’s intraday lows
- See MNI RBA Review here.
- Cash US tsys are slightly cheaper in today’s Asia-Pac session.
- Cash ACGBs are 3-4bps cheaper with the AU-US 10-year yield differential at +59bps.
- Today’s auction result extended the trend of firm pricing for ACGBs, with the weighted average yield printing 0.16bps through prevailing mids, according to Yieldbroker. Moreover, demand was stronger, as reflected by a cover ratio of 3.7250x, up from the prior 3.1950x.
- The increase in demand came with the bond’s outright yield at its cycle high, ~15bps higher than the previous outing. However, the 3/10 yield curve was around its flattest level since late 2024, approximately 40bps flatter than at the time of its syndicated sale.
- The AOFM plans to sell A$800mn of the 1.00% 21 December 2030 bond on Friday.
- The bills strip has bear-steepened, with pricing -1 to -4 across contracts.
- RBA-dated OIS pricing is firmer again today across meetings, extending yesterday’s post-RBA decision sell-off. Currently, pricing is 6-10bps firmer across meetings than pre-RBA level.
- Tomorrow, the local calendar will see Trade Balance.
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BONDS: NZGBS: Bear-Steepener On First Trading day Of Year
NZGBs closed showing a bear-steepener, with benchmark yields flat to 4bps higher, as trading resumed after the extended New Year’s break.
- The NZ-US 10-year yield differential closed at +35bps. For context, the differential was dealing around flat in mid-November.
- Cash US tsys are slightly richer in today's Asia-Pac session after Friday's modest bear-steepener. Focus in the first two full weeks of the year will be on nonfarm payrolls (Friday) and CPI reports (Jan 13) for December, with those two key reports back on their original schedules having been prioritized by the BLS. Private sector reports meanwhile are highlighted by ISM manufacturing and services reports Jan 5 and 7. No scheduled Fed speakers today.
- The local data calendar is very light this week, with just Dec Cotality home value figures out later this evening. Next week we get Nov filled jobs, along with food prices as well.
- RBNZ-dated OIS pricing closed slightly softer across meetings. No tightening is priced for February, while October 2026 assigns 20bps.
Bloomberg Finance LP / MNI
CHINA: 2-Yr Bond Future Dips Below Key Tech Levels
- China's bond futures are mixed today, following a sizeable withdrawal of liquidity during the OMO this morning.
- The 10-Yr is up +0.02 to 107.845, yet remains below all major moving averages. Upside resistance is via the 20-day EMA of 108.01.
- The 2-Yr is down -0.02 to 102.422, to dip below all major moving averages. If it is able to consolidate below, it is the first break below since early December. Each time it has broken below all moving averages in recent months, it has bounced back above within 1-2 trading days.
- Cash is quiet with the 2-Yr at 1.36% and the 10-Yr at 1.85%
US TSYS: Cash Grinds Lower; TYH5 Wedged Between Key Tech Levels
US treasury futures have done nothing today with the 10-Yr up only marginally. At 112-07+ it remains wedged between the 100-day EMA as topside resistance and the downside resistance via the 200-day EMA of 112.
Cash is doing better with yields down -0.2bps to -0.9bps across the curve with the long end underperforming.
- The US 2-Yr is at 3.475% - flat today.
- The US 5-Yr is at 3.736%, down -0.9bps today.
- The US 10-yr is at 4.185%, down -0.6bps today.
- The US 30-Yr is at 4.869%, down -0.2bps.
Equity markets were key today but have seemingly brushed off the geopolitical risks, with strong rallies.
Whilst January is typically a busy month for issuance, Monday kicks off with just a US$86bn 13-week bill auction and a US$77bn 26-week bill auction.
Data wise ISM releases are the focus with the ISM Manufacturing forecast to remain in contraction and ISM Prices paid to remain elevated
