AUSSIE BONDS: Slightly Richer, Risk Off Overnight, Light Local Calendar

• RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
• RES 2: 96.780 - High Jun 26 (cont)
• RES 1: 96.700 - High Sep 12 
• PRICE: 95.790 @ 16:47 GMT Jan 5
• SUP 1: 95.740 - Low Dec 22
• SUP 2: 95.480 - Low 1st Nov ‘23
• SUP 3: 94.932 - 1.0% 10-dma envelope

Prices printed fresh pullback lows just before the end of 2025, prompting the active contract to take out notable support into 95.760. The slower pricing for additional RBA easing - and partial pricing for a return to rate hikes next year - should keep the front-end of the curve under pressure. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 95.480 as the next major support. 

USD/CNH spot sits near 6.9835/40 in early Tuesday dealings. Monday highs in the pair were at 6.9918, with CNH losing close to 0.20% for the session. This underperformed the broader USD pullback (BBDXY down 0.11%). We did see USD/CNH move off intra-session highs as US Tsy yields fell post the ISM miss, while spot USD/CNY finished up at 6.9886, little changed from end 2025 levels. The CNY CFETS basket tracker finished up at 98.24, above end 2025 levels, but this may be short lived given yuan underperformance from Monday. 

• For spot USD/CNH, we are still oversold per RSI (14), but up from recent extremes on this metric (last 26.5). The 20-day EMA resistance point is still higher near 7.0115, while the 50-day is close to 7.0520. Recent lows for USD/CNH remain intact at 6.9664.
• Broader technicals for USD/CNH remain skewed to the downside, but focus will be on whether CNH lags any further USD weakness, particularly given the January month is usually a seasonally strong one for the yuan.
• Even with US Tsy yield weakness overnight, US-CH yield differentials still look to be within broader ranges and above 2025 lows.
• The local data calendar is empty today, with FX reserves for Dec due out tomorrow, while on Friday Dec inflation figures are out.  

ACGBs (YM +2.0 & XM +1.0) are slightly stronger after cash US tsys finished yesterday's NY session 2-4bps richer.

• US tsys ratcheted richer after this morning's headline PMI reading was a little weaker than the consensus of analysts had anticipated at 47.9 (48.4 expected, 48.2 prior), though MNI had signaled that some deterioration should be unsurprising given poor regional Fed surveys.
• Cash ACGBs are 1-2bps richer with the AU-US 10-year yield differential at +62bps.
• The bills strip is slightly stronger across contracts.
• RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 36% for February to 95% by June and 157% by December 2026.  
• The focus of this week will be Wednesday's November CPI, which is the new complete monthly series. The new trimmed mean CPI appears less volatile than the incomplete series but printed 0.7pp higher at 2.8% y/y in June 2025, which was the recent trough. Q2 was at 2.7% y/y overall.
• Bloomberg consensus forecasts trimmed mean to be stable at 3.3% in November, which would be at or above the top of the RBA's 2-3% band for the fifth consecutive month. Headline is expected to moderate 0.2pp to 3.6% but this series continues to be distorted by previous government electricity rebates.