NEW ZEALAND: Retail Spending Growth Turns Down Again

• RES 3: 95.960 - High Apr 7 (cont.)
• RES 2: 95.875 - High Jul 2 (cont.)
• RES 1: 95.780 - High Sep 12, 18 and 19
• PRICE: 95.695 @ 15:28 BST Oct 13
• SUP 1: 95.510 - Low Sep 3  
• SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14 
• SUP 3: 95.275 - Low Nov 14  (cont) and a key support

Aussie 10-yr futures are trading closer to their recent lows. It is still possible that the recent move down is a correction. Near-term resistance to watch is 95.780, the Sep 12 high. A clear break of this level would signal scope for a continuation higher and open 95.875, the Jul 2 high on the continuation chart. On the downside, key short-term support to watch has been defined at 95.510, the Sep 3 low. Clearance of this level would instead be bearish.  

TYZ5 traded sideways with limited movement overnight due to Columbus Day holiday, closing at 113-05, having been modestly weaker earlier with limited evidence of meaningful volume going through.   TYZ5 has opened in the Asia trading day +01 higher at 113-06

• The US 2-year yield finished up near 3.50%, last Friday.
• The US 10-year yield closed at 4.03% on Friday. 10-Year yields continue to consolidate at these levels with focus on whether we can test sub 4.00% in yield terms. The better global risk tones on Monday, as Trump softened his language around China (after tariff threats late on Friday), may see this 4.00% level hold for now. 
• MNI: Paulson Says Fed Should Move Cautiously In Debut Speech.  Federal Reserve Bank of Philadelphia President Anna Paulson said Monday in her first speech as an FOMC member the central bank should move cautiously and the median projection for two more cuts this year is appropriate if economic and financial conditions evolve as expected. 
• More Fed speakers tomorrow with focus on Chairman Powell's economic outlook keynote address at the NABE Annual Meeting at 1220ET.

NZGB yields sit down a touch in the first part of Tuesday dealing, led by the back end. Focus is likely to remain on downside yield risks, with card spending data weaker for Sep, highlighting the stop/start nature of the economic recovery. Monday saw global equity rebounds though, aided by softer Trump language with regards to China. US Tsy futures finished up at 113-05, just off Friday highs (there was no cash Tsy trading due to the Columbus day holiday). 

• For NZGBs, yield losses are not much beyond 1bps at this stage though, while the 2yr is steady, holding just above 2.60%, the 10yr at 4.07%. The 2/10s curve is slightly flatter at +147bps.
• For the 2yr downside focus will remain on a test of 2.50%, although we have stabilized somewhat for now. The 2yr swap rate is holding under 2.37% in early Tuesday dealings, just up from Monday lows.   
• Sep card spending data for NZ fell 0.5%m/m for retail, after a 0.6% gain in Aug. Total spending was down 0.4%m/m (after a 0.4% rise in Aug). This ends a three month run of rises for card spending, highlighting the still fragile/uncertain nature of the economic recovery. A key upcoming focus point will next Monday, when Q3 inflation prints.