AUSSIE BONDS: Subdued Session Ahead Of US CPI
Jan-15 02:07
ACGBs (YM -2.0 & XM -2.0) are slightly cheaper after trading in a narrow range in today's Sydney session.
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s directionless session. Focus turns to today’s CPI inflation data for December where rental inflation is expected to accelerate to an average figure that firmly rounds to 0.3% M/M in December.
- Cash ACGBs are 1-2bps cheaper with the AU-US 10-year yield differential at -14bps.
- Swap rates are 2-3bps higher.
- The bills strip flat to -1 across contracts.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut is fully priced for April (101%) now, with the probability of a February cut at 68% (based on an effective cash rate of 4.34%).
- Today, the local calendar is empty.
- Expectations of strong pricing at auctions were confirmed, with the latest ACGB Dec-34 supply achieving a weighted average yield that printed 0.70bp through prevailing mids (per Yieldbroker). The cover ratio also improved, rising to 2.8875x from 2.8375x.
- AOFM Bond issuance will issue A$700mn of the 2.75% 21 November 2027 bond on Friday.
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AUD: AUDUSD Higher On Lower US Yields
Dec-16 02:05
AUDUSD has bounced in line with the weaker USD as US yields fell following Friday’s rise (USD BBDXY -0.1%) despite lacklustre commodity and equity markets. The pair fell to 0.6352 in early trading but is now at 0.6371, close to the intraday high of 0.6373. Aussie is little changed against most other major G10 currencies except the yen.
- AUDJPY is up 0.3% to 98.03 after reaching 98.09. AUDNZD is down moderately to 1.1035 but has held above 1.10 throughout the session. AUDEUR is slightly lower at 0.6057 and AUDGBP is flat around 0.5042 following a low of 0.5033.
- RBA Governor Bullock requested that there was continuity on the monetary policy setting board and that seems to be the case with only two new members, which today were named as Professor Fry-McKibbin, a monetary policy specialist, and former Bendigo Bank head Baker. The new structure will begin from March 2025.
- Equities are mixed with the ASX down 0.3%, KOSPI up 0.1% and S&P e-mini slightly higher. Oil is slightly lower with WTI -0.3% to $71.07/bbl. Copper is steady and iron is down to below $104/t.
- Later preliminary December PMIs for the US and Europe print. The ECB’s Lagarde, Schnabel and de Guindos speak as well as the BoC’s Macklem.
MNI: CHINA NOV INDUSTRIAL OUTPUT +5.4% Y/Y VS MEDIAN +5.5% Y/Y: NBS
Dec-16 02:00
- CHINA NOV INDUSTRIAL OUTPUT +5.4% Y/Y VS MEDIAN +5.5% Y/Y: NBS
- CHINA JAN-NOV INDUSTRIAL OUTPUT +5.8% Y/Y VS JAN-OCT +5.8% Y/Y
- CHINA NOV RETAIL SALES +3.0% Y/Y VS MEDIAN +5.0% Y/Y
- CHINA JAN-NOV RETAIL SALES +3.5% Y/Y VS JAN-OCT +3.5% Y/Y
- CHINA YTD FIXED-ASSET INVESTMENT +3.3% Y/Y VS MEDIAN +3.5% Y/Y
- CHINA YTD PROPERTY INVESTMENT -10.4% Y/Y VS JAN-OCT -10.3% Y/Y
- CHINA NOV UNEMPLOYMENT RATE +5.0% VS OCT +5.0%
FOREX: Mixed CFTC Positioning Shifts As Year End Approaches
Dec-16 01:56
CFTC positioning for the week ending Tuesday 10th of Dec showed mixed trends between leveraged and asset manager investors. The leveraged bias was mostly in favour of the USD, while real money managers were more mixed, with some of the majors seeing support against the dollar.
- For yen, both leveraged and asset manager investors added to yen positions last week. Leveraged investors are still net short, but asset managers flipped back to longs, albeit a modest one.
- Leveraged contracts sold both EUR and GBP, adding to net EUR shorts. The opposite was true for asset managers, adding for both currencies (net shorts remain for GBP though).
- AUD trends were also mixed, asset managers added to shorts. CAD shorts were added to by for leveraged and asset manager contracts.
- The overall bias still appears for a firmer USD. In the leveraged space, only GDP is a long. For asset managers this is JPY, EUR and MXN.
Table 1: CFTC FX Positioning By Currency & Type Of Investor
| Leveraged Contracts | Asset manager Contracts | |||
| Weekly Change | Outright Position | Weekly Change | Outright Position | |
| JPY | 1620 | -23565 | 11112 | 5272 |
| EUR | -7719 | -43921 | 12213 | 162534 |
| GBP | -10778 | 41462 | 24981 | -42338 |
| AUD | 2003 | -4387 | -13630 | -34773 |
| NZD | -4343 | -6545 | -1346 | -28535 |
| CAD | -5618 | -79448 | -16885 | -143565 |
| CHF | -50 | -12845 | 5563 | -21295 |
| MXN | -3855 | -4196 | 9075 | 4437 |
Source: CFTC/MNI - Market News/Bloomberg
