JAPAN DATA: Sep Household Spending Below F/Cs, Focus To Get Real Wages Higher
Japan Sep real household spending data was softer than forecast. Real spending fell 0.7%m/m, against a -0.1% forecast (per Rtrs). In y/y terms we were up 1.8%y/y, against a 2.5% forecast. Given generally softer cash earning outcomes in recent months some moderation in spending was not a surprise, although as the chart below highlights there is still somewhat of a wedge between spending and earnings trends. The real spending backdrop has remained fairly resilient, staying positive in y/y terms for the past 5 months. The authorities focus will remain on returning cash earnings growth to real positive territory as without that we may see spending trends soften as we progress towards year end and into 2026.
- Incomes were flat in y/y terms for Sep, after rising 2.8%y/y in Aug. Food and housing spending fell in y/y terms, while medical care and transport were up above 11% as an offset.
Fig 1: Japan Real Household Spending & Cash Earnings Y/Y
Source: Bloomberg Finance L.P./MNI
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AUSSIE BONDS: ACGB Mar-36 Supply Faces Higher Yield But A Flatter Curve
The Australian Office of Financial Management (AOFM) will today sell A$1200mn of the 4.25% 21 March 2036 bond. The line was last sold on 6 August 2025 for A$900mn. This new line was sold by syndication on 5 February 2025 for A$15.0bn. Bidding at today’s auction is likely to be shaped by several key factors:
- The outright yield is roughly 10-15bps higher than the previous auction level and about 20bps below the late February peak.
- However, the 3/10 yield curve is slightly flatter than the previous auction level and sits around 30-35bps flatter than its recent high.
- Sentiment toward longer-dated global bonds remains uncertain.
- This bond is also included in the XM futures basket, which may support demand.
- Overall, firm pricing is still anticipated at today’s auction, given the higher yields and other favourable factors.
- Results are due at 0100 BST / 1100 AEST.
JAPAN DATA: August Labor Earnings Below Forecast, Adding To Recent Softness
Japan data notably below expectations, real earnings remaining entrenched in negative territory, at -1.4%y/y. This also follows the July outcome being revised to negative (from +0.5%y/y). Not a firm labor earnings picture in recent months. USD/JPY hasn't reacted much to the print, we sit around 152.00, close to session highs. More details to follow
NZD: NZD/USD - What Happens If The RBNZ Cuts By 50bps
The NZD has been trading heavy ever since the very poor growth data came out mid September. A dovish 50bps cut today is likely to increase the headwinds for the NZD and could be the catalyst it needs to sustain a break sub 0.5750/0.5800. Should NZD/USD break through this support the focus will turn toward the multiple bottoms toward the 0.5500 area. The market will likely be going into this meeting with a dovish skew so there is also a risk the RBNZ could disappoint which would then see an initial knee-jerk higher. If this eventuates, upside focus for NZD/USD will be back towards the 0.5850/0.5900 area where I would suspect sellers return.
Fig 1: NZD/USD Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
