US STOCKS: S&P - Continues To Benefit From An 'Imminent' Deal

The Australian Office of Financial Management (AOFM) will today sell A$1000mn of the 3.75% 21 April 2037 bond. The line was last sold on 24 March 2026 for A$1000mn. The sale drew an average yield of 5.0650%, at a high yield of 5.0675% and was covered 3.6650x. There were 33 bidders, 15 of which were successful and 9 were allocated in full.

• This week's ACGB supply is at recent average weekly issuance of $2000mn, with A$1000mn of the 2.50% 21 May 2030 bond on Friday.
• The Australian Government has released the Mid-Year Economic and Fiscal Outlook (MYEFO). This notice provides updated guidance on planned issuance of Australian Government Securities by the AOFM in 2025-26.
• Planned issuance of Treasury Bonds (including Green Treasury Bonds) for 2025-26 has been revised to around $125 billion (of which $62.5 billion has been completed). Planned issuance of Treasury Indexed Bonds in 2025-26 remains between $2 billion and $3 billion (of which $1.5 billion has been completed).
• Over the remainder of 2025-26, the AOFM plans to: Issue a new October 2037 Treasury Bond (by syndication and subject to market conditions); Issue a new June 2036 Green Treasury Bond (by syndication and subject to market conditions); Conduct Treasury Bond tenders most weeks; and Hold 1-2 Treasury Indexed Bond tenders each month.
• Results are due at 0200 BST / 1100 AEST.

Japan March trade figures were close to forecasts. Exports rose 11.7%y/y (11.0% was forecast while the Feb outcome was 4.0%). Imports were slightly strong than expected at 10.9%y/y (7.0% forecast and 10.3% for Feb). This saw the trade surplus come in under market forecasts at ¥667.0bn, with ¥1058.2bn projected and ¥44.3bn prior. This was the highest surplus in quite a number of years. The negative terms of trade shock from the Iran may see the surplus position deteriorate in month ahead, although the Citi JPY terms of trade proxy remains comfortably above 2022 lows. The chart below plots this metric (the orange line) against Japan's trade balance position. 

• The reasonable export growth picture matches trends seen in South Korea and Taiwan, although the export growth rate for these economies is notably stronger, with March export orders for Taiwan up 65.9%y/y. Greater relative chip/tech exposure in these economies is likely a factor.
• Exports to China were up to 17.7%y/y. Via BBG: "...led by chips and electronic components as well as non-ferrous metals, as disruptions tied to the Lunar New Year holidays waned." To the EU we also strong growth of 18.2%y/y. To the US we rose 3.4%y/y. 

Fig 1: Japan Trade Balance and Citi JPY Terms Of Trade Proxy  

Source: Citi/Bloomberg Finance L.P/MNI 

Natural gas was higher on Tuesday over the ongoing closure of the Strait of Hormuz and uncertainty over when or even if further US-Iran talks will take place. After threatening more attacks on Iran, President Trump announced an indefinite extension of the ceasefire helped prices to stabilise and between the lines suggests that negotiations should continue at some point. However, the US blockade continues.

• In response to ongoing Middle East uncertainty, European gas jumped 7.1% to EUR 43.15 but is still down 15% this month in response to the pause in hostilities and hopes that LNG will be able to leave the area. However, so far, no LNG vessels have been able to pass the Strait.
• May 26 Dutch TTF reached a peak of EUR 44.485, the highest since 14 April, signalling a major market move yesterday. Vitol’s Escobar noted that the rise in gas prices since the start of the Iran War has driven some “demand destruction” in manufacturing and warned that could result in shortages of other products, such as fertiliser (Bloomberg).
• US gas carefully moved higher on Tuesday by 0.8% to $2.710 close to the intraday high of $2.72 but it is down 6% in April and currently lower trading around $2.685.
• Upside is limited in the US given that domestically it is in a shoulder season and forecasts are signalling mild to warmer weather towards month end. There is also unlikely to be increased demand for LNG exporters as Bloomberg reports their facilities are close to capacity.