AUSSIE BONDS: Richer After Easing In Greenland Tensions, Jobs Data Due

Crude was driven higher on Monday by tensions impacting oil producers but excess supply remains the market’s main concern. Prices rose around 2.5% after the US boarded two Venezuelan shadow fleet tankers and is seeking a third. Ukraine continues to target Russian energy infrastructure striking a pipeline on the weekend after it hit an empty vessel in the Mediterranean. This has pushed distillate prices higher again. 

• WTI is up 2.5% to $57.95/bbl after breaking above $58.00 a number of times over the US session but unable to hold them. The benchmark is still down slightly over December and the trend remains downward. Initial resistance is at $58.74, 50-day EMA, while support is at $54.89, 16 December low.
• Brent rose 2.6% to $62.03/bbl following a high of $62.17. Gains are still seen as corrective and have remained below initial resistance at $62.65, 50-day EMA. Moving average studies are in a bear-mode position with key support at $58.11.
• Global distillate prices rose 2.3% and are 2.7% above Friday’s low.
• Venezuelan storage is approaching limits driven by the US blockade which could result in a cut in production. Sanctions have substantially reduced its global fuel importance despite having the largest known oil reserves and it was only the 17th largest exporter in 2023 according to the IEA. China is its main customer.
• Ukraine struck a Lukoil platform in the Caspian Sea on the weekend. Talks continued in Florida for a peace agreement but Russia said today that they were not a “breakthrough”, according to Reuters.

NZGB yields are edging up in the first part of Tuesday dealings, but gains are not much beyond 1bps at this stage (after strong yield gains for Monday). This comes after a positive US Tsy yield backdrop as Monday trade unfolded (albeit amongst tighter ranges, lower volumes ahead of the Christmas break). Tsy benchmarks were around 1-3bps firmer, with the front end seeing slightly large yield gains for Monday trade. Comments from Fed Gov Miran on Bloomberg TV that the incoming data have "come out in accordance with my view of the world", referring to last week's CPI and Employment Situation reports: "should push people into a dovish direction", didn't impact Tsy yields much. 

• NZGB price action so far today follows strong yield gains yesterday, with the 2yr remaining edging up +1bps to 2.71%. The 10yr is around 4.46% (up a touch from end Monday levels, where we saw a +7.5bps gains).
• The 2/10s curve remains in a strong uptrend, last +176bps, while the NZ-US 10yr differential is around +31bps, so still holding the bulk of Monday's rise.
• Local news flows has been light, outside of a free trade agreement between NZ-India, although doesn't give NZ access to India's diary market.
• Via BBG: "The deal cuts duties on 95% of New Zealand’s exports to the South Asian nation — ranging from timber to wool — but stops short of opening India’s dairy market to the world’s largest dairy exporter, according to official statements. Major economies, including the US, have been pushing India to provide wider access to its farm sector." 

• South Korea to Sell KRW300 bn 20-Year Bonds
• Hong Kong to Sell HK$19.8 Billion 182-Day Bills
• Hong Kong to Sell HK$64.984 Billion 91-Day Bills
• Bank of Thailand to Sell THB65 bn of 91-Days Bills
• MAS to Sell S$13.9 Billion 25-Day Bills
• MAS to Sell S$2 Billion 249-Day Bills
• MAS to Sell S$22 Billion 83-Day Bills
• Bank Indonesia to Sell 91-Day Bills
• Bank Indonesia to Sell 31-Day Bills
• Bank Indonesia to Sell 274-Day Bills
• Bank Indonesia to Sell 365-Day Bills
• Bank Indonesia to Sell 182-Day Bills