JAPAN DATA: Rtrs Monthly Tankan At Multi Yr Highs, Official Q3 Print Due Oct 1
Sep-09 2025 23:55
Headlines crossed earlier from Reuters from its monthly survey tracking the BoJ's quarterly Tankan survey - "Manufacturers' sentiment index +13 in September vs +9 in August" (Rtrs). It added, "...showed the manufacturers' mood index improved to 13 in September from 9 in August, marking a third month of increases and the highest reading since August 2022."
- "Multiple managers in the transport machinery sector said they were receiving solid orders, while some referred to stagnant domestic production in recent months given a shrinkage in exports" (via Rtrs). However, the report also noted more caution around the outlook, reflecting concerns on the domestic economic backdrop.
- The official Q3 Tankan report will be out on Oct 1 and will be a key watch point for the BoJ, as it looks to gauge fallout from the US-Japan trade deal.
- The last Tankan survey for Q2 painted a resilient backdrop for large manufacturers, while the all industry capex estimate was also nudged higher. The chart below plots this capex estimate against total capex investment y/y.
- A resilient Q3 outcome could give the BoJ renewed confidence in the economic outlook and ring rate hikes back onto the agenda. We saw late yesterday some hawkish headlines via BBG, indicating there is a "chance of" a hike this year despite the political turmoil following PM Ishiba's resignation Sunday, which also weighed on USD/JPY (but follow through to the downside was limited). "Some officials are even of the view that a hike might be appropriate as early as October", the Bloomberg article added.
- Market pricing for a hike in Oct remains fairly modest at this stage though.
Fig 1: Tankan Capex Estimate & Capital Investment Y/Y
Source: Bloomberg Finance L.P/MNI
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AUSSIE BONDS: Slightly Cheaper Ahead Of Tomorrow's RBA Decision
Aug-10 2025 23:34
ACGBs (YM -1.0 & XM -2.0) are slightly weaker after US tsys finished moderately cheaper on Friday.
- The focus of the week will be on Tuesday’s RBA decision, with it widely expected to cut rates 25bp to 3.6%. There are also a number of key data releases too. Q2 wages print on Wednesday and July jobs data Thursday.
- The RBA announcement at 1430 AEST will include how the Monetary Board voted and an update of staff projections. Governor Bullock will hold her usual press conference at 1530 AEST.
- Q2 wages on Wednesday are forecast to moderate slightly rising 0.8% q/q & 3.3% y/y after Q1’s 0.9% q/q & 3.4% y/y. July labour market data print on Thursday and will be watched closely for signs of further deterioration.
- Cash ACGBs are 1-2bps cheaper with the AU-US 10-year yield differential at -2bps.
- The bills strip is flat to -2 across contracts.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut tomorrow is given a 97% probability, with a cumulative 61bps of easing priced by year-end.
- Today, the local calendar will be empty.
- Next week, the AOFM plans to sell A$1200mn of the 4.25% 21 December 2035 bond on Wednesday and A$1000mn of the 2.75% 2 1 November 2029 bond on Friday.
NEW ZEALAND: July Data Releases Ahead Of August RBNZ Meeting
Aug-10 2025 23:29
With the next RBNZ meeting approaching (August 20), this week contains a number of high frequency releases that the MPC monitors and should give a sense for how the economy began Q3.
- July card spending is out Wednesday and while it is off its lows, growth has remained soft. There could be some payback in the month following the 0.5% m/m rise in June.
- On Friday, July monthly price series are released including food, travel, electricity and rents. Food and power price inflation have been trending higher while petrol and rents have been moderating.
- The July BNZ manufacturing PMI also prints on Friday. It returned to contractionary territory in May after five months signalling growth in the sector. In June, the pace of decline moderated with the index at 48.8 after 47.4.
- Net inward migration has moderated in line with increasing difficulty finding work. June is released on Friday.
BONDS: NZGBS: Cheaper With US Tsys, Light Local Calendar
Aug-10 2025 23:20
In local morning trade, NZGBs are 1-2bps cheaper after US tsy yields ended Friday 2-4bps higher on the bounce in risk appetite and as the market continued to digest the $125 B in new supply after poor auction take down.
- Wall Street rallied after an erratic week that was marked by more tariff news, earnings beats, Fed policy considerations, and geopolitics. Strength in big tech with a fresh high on the "Magnificent Seven".
- St Louis Fed Pres Musalem (2025 FOMC voter, hawk) says in a Q&A that he supported the July decision to hold rates as the FOMC is missing on its inflation target but not its employment target. He says that looking forward, they may miss on both sides of the mandate - but doesn't sound too concerned about the labour market (noteworthy given the weak July payrolls report) albeit he sees risks to the downside. And he eyes potential upside tariff-related risks to inflation.
- Swap rates are 1-3bps higher, with a steeper 2s10s curve.
- RBNZ dated OIS pricing is little changed across meetings. 23bps of easing is priced for August, with a cumulative 41bps by November 2025.
- Today, the local calendar will be empty. The next release will be Card Spending data on Wednesday.
