JGBS: Subdued Session, Market Awaits Jackson Hole

ACGBs (YM flat & XM +1.5) are slightly stronger but off Sydney session bests.

• Cash US tsys are 1-2bps cheaper in today's Asia-Pac session after yesterday's modest rally.
• Cash ACGBs are flat to 2bps richer with the AU-US 10-year yield differential at -8bps.
• The AOFM announced that the issue by syndication of the new 4.25% 21 October 2036 Treasury Bond has been priced at a yield to maturity of 4.36 per cent. The issue size is $16 billion in face value terms. There was a total of $61.9 billion of bids at the final clearing price.
• (Bloomberg) -- Australia's economy will expand 0.5% in 2Q, according to the latest median estimate from a Bloomberg News survey conducted from July 17 to July 22.
• The bills strip is slightly mixed.
• RBA-dated OIS pricing is slightly softer across meetings today. A 25bp rate cut in August is given a 100% probability, with a cumulative 65bps of easing priced by year-end.
• Tomorrow, the local calendar will see S&P Global PMIs (P) and a speech by RBA Governor Michele Bullock, titled `The RBA’s Dual Mandate - Inflation and Employment' at the Anika Foundation.

NZGBs closed showing a twist-flattener, with benchmark yields 1bp higher to 2bps lower. 

• Cash US tsys are 1-2bps cheaper in today's Asia-Pac session after yesterday's modest rally.
• Today’s focus has been on the US-JN trade deal. Japan will pay a 15% reciprocal tariff to US Trump notes. This is lower than the 25% rate which had been threatened.
• (Bloomberg) -- RBNZ publishes new residential mortgage lending data for June, on its website. Lending to all borrowers NZ$8.26b, Gains 47% y/y, Increases 3.5% m/m after seasonal adjustment: RBNZ.
• Satish Ranchhod(Westpac) on LinkedIn: "Inflation in New Zealand has picked up to 2.7%, and it's on course to rise back up to around 3% by the end of this year, it's a mixed picture under the surface.”
• Swap rates closed flat to 2bps lower, with the 2s10s curve flatter.
• RBNZ dated OIS pricing closed little changed across meetings. 21bps of easing is priced for August, with a cumulative 37bps by November 2025.
• Tomorrow, the local calendar will see a speech from the RBNZ's Conway on tariffs and the economy.
• Tomorrow, the NZ Treasury plans to sell NZ$225mn of the 3.0% Apr-29 bond, NZ$175mn of the 2.75% Apr-37 bond and NZ$50mn of the 5.0% May-54 bond.

The BBDXY has had a range of 1195.19 - 1197.06 in the Asia-Pac session, it is currently trading around 1196, +0.05%.  The USD again fell very easily overnight, aided by the move lower in US yields. The market is much more comfortable selling USD’s, while below 1220 rallies should continue to find supply. What stands out overnight though is the USD could not move higher while the risk of Powell being removed hung over its head, last night both Trump and Bessent pulled back from that scenario and intimated Powell would complete his term. US yields have moved lower as a result taking the USD with it, does that mean the USD now goes down in all scenarios ?

• EUR/USD -  Asian range 1.1731 - 1.1749, Asia is currently trading 1.1735. The pair bounced off its first support around the 1.1600 area. The price still looks a little stretched in the short term, first support around 1.1550/1600 then more importantly the 1.1450 area.
• GBP/USD - Asian range 1.3517 - 1.3535, Asia is currently dealing around 1.3525. The support around 1.3350/1.3400 has proved to be solid first up. Bounces back towards 1.3500/1.3550 should now see offers initially. While the support holds the market will be encouraged to continue to play from the long side.
• USD/CNH - Asian range 7.1592 - 7.1727, the USD/CNY fix printed 7.1414, Asia is currently dealing around 7.1600. Sellers should be around on bounces while price holds below the 7.2000 area and the PBOC manages the fix lower. Above 7.2000 and we could see a test of the USD Shorts.
• Cross asset : SPX +0.25%, Gold $3423, US 10-Year 4.364%, BBDXY 1206, Crude oil $65.54
• Data/Events : EZ Consumer Confidence

Fig 1: GBP/USD Spot Daily Chart

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