GOLD: Pullback Continues
Aug-07 03:54
Gold is 0.2% lower in today’s Asia-Pac session, after closing 0.8% lower at $2390.82 on Tuesday.
- This leaves the yellow metal ~3.5% down from last Friday’s high.
- Commerzbank says that along with overblown expectations of Fed rate cuts, selling to compensate for losses in other assets may have also been behind gold’s recent weakness.
- Nevertheless, bullion remains ~15% higher this year after hitting an all-time high in July, mainly supported by bets the US Federal Reserve will pivot to monetary easing. Lower borrowing costs are positive for bullion as it doesn’t pay interest.
- According to MNI’s technicals team, this recent weakness appears to be a correction, for now. However, a clear break of support at the 50-day EMA at $2,375.4 would signal scope for a deeper retracement towards $2277.4, the May 3 low.
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JGBS: Futures Holding Weaker In Early Afternoon Dealings
Jul-08 03:54
In early afternoon trading, JGB futures are holding weaker, -17 compared to the settlement levels.
- Outside of the previously outlined Cash Earnings, Trade Balance and Bank Lending data, there hasn't been much in the way of domestic drivers to flag.
- Cash US tsys are 1-2bps cheaper in today's Asia-Pac session after Friday’s strong post-Payrolls rally. It may reflect some profit-taking along with a reaction to yesterday’s French election result and news on the PBoC bond purchases.
- The PBoC will carry out temporary bond repurchase or reverse repurchase operations depending on the market situation during working days between 16:00 and 16:20.
- Cash JGBs are flat to 1bp cheaper, with the 5-7-year zone underperforming.
- The swaps curve has bear-steepened, with rates 1-2bps higher. Swap spreads are wider.
US TSY FLOWS: US TSY FUTURES: BLOCK - 5Y, 10Y & 30Y Fly
Jul-08 03:01
- -7,300 FVU4 106-29+ post time bid at 12:27:37 AEST, DV01 $292,000. Contract trades 102-06-29¼ (-0-04) last vs. 106-29¼ high
- +7,000 UXYU4 113-29+, post time offer at 12:27:37 AEST, DV01 $626,000. Contract trades 113-29 (+ 07+) last vs 113-29 high
- -1.570 WNU4 125-16, post time bid at 12:27:37 AEST, DV01 $316,000. contract trades 125-15 (- 16) last vs 125-27 high
STIR: RBNZ Dated OIS Pricing 35bps of Easing Ahead Of Wednesday’s RBNZ Policy Meeting
Jul-08 02:55
RBNZ dated OIS pricing is slightly mixed across meetings today. A cumulative 35bps of easing is priced by year-end.
- The local calendar is light until the RBNZ’s Policy Decision on Wednesday.
- Economists surveyed by Bloomberg unanimously expect a no-change decision. Most economists don’t expect the RBNZ to make any major changes to its hawkish commentary, despite signs of downside risks to growth.
- Net migration is also on Wednesday, with its release before the RBNZ decision.
- A majority of Shadow Board members recommended the RBNZ keep the OCR at 5.5% this week according to NZIER.
Figure 1: RBNZ Dated OIS Pricing (%)
Source: MNI – Market News / Bloomberg
