AUSSIE BONDS: Smooth Digestion Of Mar-36 Supply But With Less Demand

• CHINA PBOC CONDUCTS CNY106.5 BLN VIA 7-DAY REVERSE REPO MON

• CHINA SETS YUAN CENTRAL PARITY AT 7.1506 MON VS 7.1535

The ESU5 Friday night range was 6276.50 - 6308.75, Asia is currently trading around 6300. US Equity futures drifted lower on Friday as the market began eyeing the tariff deadline this week. This morning has seen US futures open a little higher but still off the highs from last week, ESU5 -0.35%, NQU5 -0.40%. This week the tariff deadline will be closely watched by a market that looks to have a lot of positives already baked in the price.

• Wei Li Chief Strategist at Blackrock on Linkedin - “Big Beautiful Bill” could boost equity sentiment and push up term premium - still low to historical comparables - through worsening deficit. The Congressional Budget Office puts it at an additional, front-loaded, $3.25T in borrowing over 2025-34. I continue to favour US equities over long Treasuries.”
• Charlie Bilello on X: “ Over the last 17 years, US stocks have gained 592% vs. 140% for International stocks and 93% for Emerging Markets.” 
• Mohamed A. El-Erian replied on X: ”This is a stunning out-performance. That’s the obvious remark, of course. Less obvious is where do we go from here as illustrated by those who feel that:
• (i) America’s valuation gap has grown to excessive levels and will be subject to some mean reversion which, as illustrated earlier this year, would translate into meaningful gains for the rest of the world: and
• (ii) Continued US outperformance is ahead given the deeply (structurally) embedded nature of the economy’s corporate innovation and competitive drive.” 
• The market has been caught underweight and with momentum type funds(CTA’s) together with Retail adding through all-time highs these reluctant PM’s are being forced to return to the market. 
• Short-term this does look a little overdone but dips are just non-existent at the moment as risk surges higher. Could the risks this week around the tariff deadline give the market some pause ? First support is back towards the 6000/6100 area.

Fig 1: SPX Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P