AUSSIE BONDS: Richer But Off Bests, Tracking US Tsys
ACGBs (YM +3.0 & XM +4.0) are richer but off session bests.
- January headline CPI inflation printed slightly lower than expected at 2.5% y/y, in line with December. However, the underlying trimmed mean rose 0.1pp to 2.8%, but still below the top of the RBA’s 2-3% band. The first month of the quarter has limited updates for services inflation.
- The move away from the session’s bests, however, can be traced back to cash US tsys, which are currently 2-3bps cheaper in today’s Asia-Pac session. Earlier, the passage of the budget blueprint by the US House provided an upward backdrop for yields.
- "The House budget would pave the way for $4.5 trillion in tax cuts — about enough to pay for extending the expiring cuts but not enough to also cover Trump’s campaign promises for additional tax relief. The measure would add to the budget deficit despite calling for $2 trillion in overall spending cuts over ten years." (per BBG)
- Cash ACGBs are 3-5bps richer with the AU-US 10-year yield differential +3bps.
- The bills strip has bull-flattened, with pricing flat to +4.
- Tomorrow, the local calendar will see Private Capital Expenditure data and Michael Plumb, Head of Economic Analysis Department, deliver a speech at the ABE Annual Forecasting Conference, titled ‘Why is productivity important?’
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BONDS: NZGBS: Richer With US Tsys, Trump Tariffs In Focus
NZGBs closed 2bps richer, aligning with strengthening in cash US tsys in today’s Asia-Pac session.
- Cash US tsys are dealing 1-4bps richer in today’s Asia-Pac session, with a flattening bias, after finishing Friday mildly stronger.
- US stock futures are dealing lower ahead of key earnings week, with the S&P 500 down 0.8% and the Nasdaq down ~0.50%.
- “In a social media post on Sunday, Trump said he ordered an emergency 25% tariff on all Colombian goods coming into the US, which will be raised to 50% in a week. Oil, gold, coffee and flowers top the list of exports, according to Colombia’s tax authorities.” (per BBG)
- The US Treasury will auction $69 billion of two-year notes and $70 billion of five-year debt later Monday.
- Focus this week is the FOMC policy announcement on Wednesday.
- Swap rates closed 2bps lower after a subdued session given Auckland Anniversary and Australia Day holidays.
- RBNZ dated OIS pricing closed little changed. 47bps of easing is priced for February, with a cumulative 109bps by November 2025.
- Tomorrow, the local calendar will see Filled Jobs.
- On Thursday, the NZ Treasury plans to sell NZ$200mn of the 1.50% May-31 bond, NZ$200mn of the 4.25% May-36 bond and NZ$100mn of the 1.75% May-41 bond.
CHINA: Futures Jump as Industrial Profit Decline Continues. (Corrected)
{CH} China:
• The PBOC conducted its daily OMO this morning injecting CNY175bn ahead of the Lunar New Year break, just as China data showed that decline in Industrial Profits is now into it’s third year with a decline of -3.3% for December.
• The benchmark 10YR future jumped +0.365 in this morning’s trade to be at 109.405.
• Having edged towards the 20-day EMA last week, today’s moves sees the contract break out above all major technical levels with key levels being 20-day EMA 109.05, 50-day EMA 108.40, 100-day EMA 107.55 and 200-day EMA 106.60.
• China’s 5YR future jumped +0.295 and the 2YR future jumped +0.142.
• The Lunar New Year holidays sees China out Jan 28-Feb 04 inclusive and it is likely that the Central Bank will provide liquidity leading into the holiday period which could see the resumption of the upward trend.
CHINA: Futures Jump as Industrial Profit Decline Continues.
- The PBOC conducted its daily OMO this morning injecting CNY175bn ahead of the Lunar New Year break, just as China data showed that decline in Industrial Profits is now into it’s third year with a decline of -3.3% for December.
- The benchmark 10YR future jumped +0.365 in this morning’s trade to be at 109.405.
- Having edged towards the 20-day EMA last week, today’s moves sees the contract break out above all major technical levels with key levels being 20-day EMA 109.05, 50-day EMA 108.40, 100-day EMA 107.55 and 200-day EMA 106.60.
- China’s 5YR future jumped +0.295 and the 2YR future jumped +0.142.
- The Lunar New Year holidays sees China out Jan 28-Feb 04 inclusive and it is likely that the Central Bank will provide liquidity leading into the holiday period which could see the resumption of the upward trend.
- Key data out next week: Industrial Profits Jan 27, PMI’s 27 Jan.
