EM ASIA CREDIT: PT Bank Mandiri (BMRIIJ, Baa2/NR/BBB) new $benchmark mandate

ACGBs (YM -6.0 & XM -6.0) are cheaper and near the Sydney session’s worst levels.

• Q4 Value of New Loans for Housing rose 1.4% q/q. Australia is failing to capitalize on research and development to build prosperity, according to a government-commissioned report, leaving its economy with flagging growth, lower productivity and limited complexity. (see link)
• Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s modest sell-off. The focus is now on key US CPI inflation data today at 0830ET.
• Cash ACGBs are 5-6bps cheaper with the AU-US 10-year yield differential at -9bps.
• The latest ACGB May-41 supply auction continued the recent trend of firm pricing, with the weighted average yield printing 0.22bps through prevailing mids (per Yieldbroker). The cover ratio increased to a robust 3.7875x, reflecting solid demand. Today's result was likely bolstered by steeper 3/10 and 10/20 yield curves and the recent improvement in sentiment toward longer-dated global bonds.
• Swap rates are 4-6bps higher, with the 3s10s curve steeper.
• The bills strip is -2 to -5 across contracts.

• Tsys are doing very little today, with front-end tsys futures unchanged. There has been small buying of FV & TY call options, however nothing major. TU is unch at 102-22⅜, while TY is +00+ at 108-31.
• A bull phase in futures remains in play despite the run lower off recent highs. This leaves the TY contract holding the bulk of its latest gains. The contract traded through the 50-day EMA of 109-10+ earlier in the month, which highlights potential for a stronger reversal and sights are on a climb above the 110-00 handle. On the downside, initial firm support to watch is unchanged at 108-20+, the Feb 4 low. Clearance of it would signal a reversal and the end of the corrective cycle.
• Cash tsys are little changed so far today, with the 10yr trading at 4.531%.
• January core CPI is expected to rise by 0.3% m/m,  from a 0.4% m/m rise in Dec. Powell’s will also be speaking at the two-day testimony marathon
• US CPI Preview - ( USCPI_Prev_Feb2025_e3ccd233d6.pdf )

AUDUSD has been trading in a narrow range today between 0.6288 and 0.6300 and is currently up to 0.6299. The USD index is 0.1% higher driven by a weaker yen but other currencies are little changed as markets wait for January US CPI out later today.

• With the yen underperforming, AUDJPY is up 0.7% to 96.62, close to the intraday high.
• Aussie is little changed against other major currencies with AUDNZD down 0.1% to 1.1124, near its low, AUDEUR around 0.6079 and AUDGBP at 0.5059.
• Equities are mixed today with the ASX up 0.2%, Hang Seng +1.1 but CSI 300 down 0.1%, while the S&P e-mini is flat. Oil prices are lower with WTI -0.35% to $73.06/bbl. Copper is 0.3% lower and iron ore is around $106/t.
• Later Fed Chair Powell testifies to the House financial services committee and the Fed’s Bostic and Waller also speak. January US CPI prints and Bloomberg consensus is expecting no change in the headline at 2.9% but for core to ease 0.1pp to 3.1% (see MNI US CPI Preview). January budget and real earnings data are also out. The ECB’s Elderson speaks at an MNI Connect event and BoE’s Greene appears.