EM ASIA CREDIT: Thai Oil (TOPTB): USD PerpNC5.25 priced

• MNI: JAPAN NOV CORP GOODS PRICE INDEX +2.7% Y/Y; OCT +2.7%
• JAPAN NOV CORP GOODS PRICE INDEX +0.3% M/M; OCT +0.5%

The Australian Office of Financial Management (AOFM) will today sell A$1000mn of the 1.00% 21 December 2030 bond.  Today’s auction is likely to be shaped by several key factors:

• The current yield is a massive 80-85bps higher than the previous auction and sits only 10bps below the November 2024 high of 4.43%.
• The 3/5-year yield curve is around the same level as last time, 15-20bps below recent highs.
• Exclusion of the line from the YM or XM baskets may limit demand.
• Moreover, investor sentiment toward global bonds has weakened recently.
• Then comes the market about face with respect to the RBA rates outlook. After yesterday’s hawkish press conference from RBA Governor Bullock, RBA-dated OIS pricing shows the probability of a 25bp hike rising from 36% for February to 101% by May and 196% by November 2026.  
• While firm pricing is expected at the auction, these headwinds may limit the overall strength of demand.
• Results are due at 0000 GMT / 1100 AEST.

• RES 3: 140.08 - High Jun 13  
• RES 2: 139.05 - High Aug 4 
• RES 1: 137.30 - High Sep 8 and key short-term resistance
• PRICE: 134.11 @ 16:22 GMT Dec 09
• SUP 1: 133.74 - Low Dec 08
• SUP 2: 133.12 - 1.0% 10-dma envelope  
• SUP 3: 132.94 - 3.0% Lower Bollinger Band

Prices traded to new pullback and cycle lows again Monday, weighed by building expectations of a December BoJ rate hike and a breach of support in futures prices. This affirms the firm downtrend that’s dominated prices since mid-September, and prices will need to challenge resistance before signaling any broader reversal.