US TSYS: Tsys Futures Steady Ahead Of PCE Data
Dec-20 04:45
- Tsys futures are trading steady today as investors await the release of US core PCE data, after the Fed signaled concern over the risk of inflation pressure facing the economy. TU is 00+ at 102-22⅝ while TY is +04 at 108-23+.
- A bearish short-term theme in Treasury futures remains intact and Wednesday’s move lower reinforces the current trend condition. The TY contract has traded through key short-term support and the bear trigger at 109-02+, the Nov 15 low. The breach confirms a resumption of the downtrend and opens 108+12+, a Fibonacci projection. On the upside, initial firm resistance is at 110-13, the 20-day EMA.
- The Republican-led House rejected a temporary funding plan backed by President-elect Donald Trump with just over 24 hours to go before a US government shutdown, while the new proposed bill has so far been unable to gain enough votes to pass,
- Cash tsys are trading flat to 1.5bps lower so far today, with the 5 & 7yr tenors outperforming. The 2yr is trading -1.1bps at 4.306%, while the 10yr is -0.6bps at 4.490%, the 2s10s remains near its steepest levels since June 2022 at +24bps.
- Fed Fund futures are pricing in no further cuts until July, when there is 28.4bps of cut priced, and only 38bps of cuts priced through to December 2025.
- Friday's schedule includes the November PCE report and the final December UMichigan survey, while we also get the first post-FOMC meeting commentary with SF's Daly and NY's Williams appearing in the morning.
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AUSSIE BONDS: Little Changed, RBA Governor Speech Tomorrow
Nov-20 04:06
ACGBs (YM -1.0 & XM +0.5) are slightly mixed, with a flattening bias, in today’s data-light Sydney session.
- "Investors such as UBS Asset Management and Jamieson Coote Bonds Pty see value in Australian bonds as the global debt selloff looks stretched and anticipation of a policy pivot grows." (See link)
- The latest round of ACGB Dec-35 supply showed strong pricing, with the weighted average yield printing 0.47bp through prevailing mids. The higher outright yield and steep curve likely aided the absorption of today’s ACGB supply. However, the notable worsening in global bond sentiment likely weighed on demand at today’s auction.
- Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s modest haven demand-induced gains.
- Cash ACGBs are flat, with the AU-US 10-year yield differential at +16bps.
- Swap rates are little changed.
- The bills strip is slightly cheaper across contracts, with pricing flat to -3.
- RBA-dated OIS pricing shows no easing by year-end. A 25bps rate cut is not fully priced until July.
- Tomorrow, the local calendar will see a speech by RBA Governor Bullock at the Women In Payments Conference.
FOREX: USD Ticks Higher, USD/JPY Close To 155.00, Aggregate Moves Modest
Nov-20 03:56
The earlier outperformance from risk currencies has given way to a firmer USD backdrop as Wednesday trade has unfolded. The USD BBDXY index was last around 1279.15, a touch higher for the session.
- Aggregate FX moves are not large at this stage. USD/JPY has traded with a positive bias, but is yet to break above 155.00. US yields sit close to unchanged, albeit with a slight bias to move higher at the back end.
- US equity futures are off earlier highs but still sit in positive territory, last +0.1%. This comes ahead of the key Nvidia earnings release. Regional equities are mixed, but aggregate moves aren't much beyond 0.50% at this stage.
- AUD and NZD sit off earlier highs, but are only down 0.10% at this stage. AUD/USD last near 0.6525, NZD just under 0.5900. EUR/USD has slipped back under 1.0600.
- We remain within broader ranges though, as markets await fresh catalysts. Technical indicators still suggest USD dips will be supported.
EQUITIES: China & HK Equities Trade In Narrow Ranges Ahead Of Nvidia Earnings
Nov-20 03:42
Hong Kong and China equities are mostly higher today, with earlier losses now being erased. China's central bank kept its loan prime rates unchanged, in line with expectations. The HSI is trading flat with losses in Geely Automobile, Xiaomi, and Alibaba offsetting wider gains, while the CSI 300 now trades 0.2% higher. Investors remained cautious ahead of Nvidia's earnings, which could serve as a key catalyst for global sentiment. Meanwhile, Chinese tech stocks faced uncertainty amid geopolitical concerns tied to the next Trump administration.
- China healthcare stocks are the top performing today, the CSI 300 Healthcare Index is 2.45% higher with Tigermed jumping 8%. Small & mid-cap stocks out outperforming large-cap today, with the CSI 2000 up 2.50%, while the CSI 1000 trades 1.60% higher.
- Hong Kong listed equities are trading in narrow ranges today, with major benchmarks trading little changed.
