US TSYS: Tsys Yields Richer Ahead Of Nonfarms Later
Mar-07 04:58
- Tsys futures are trading higher ahead of the US jobs report and Federal Reserve Chair Jerome Powell’s speech on the economic outlook. TU is +01 3/8 at 103-18 5/8, while TY is +07+ at 111-01 with TY trading after Thursday's highs.
- As per MNI's technical team the trend in tsys remains bullish and the latest pullback appears corrective. TY has pierced resistance at 111-22+, the Dec 3 ‘24 high. A clear break of this level would strengthen a bullish theme and open 112-02 and 112-13, Fibonacci projection points. Note that the daily trend condition is overbought, a pullback is allowing the overbought set-up to unwind. Firm support is at 110-00, the Feb 7 high.
- Cash tsys yields are 2-3bps richer in Asia today, with the belly outperforming, the 2s7s30s fly -1bps at -22bps, although we did see a large bounce in it this week, moving almost 10bps. The 2yr is -2.4bps at 3.937%, the 10yr is -2.7bps at 4.251%. The 2s10s is -0.5bps at 31.318, although has steepened 10bps this week.
- Non-farm payrolls are expected to have increased 160,000 last month, up from 143,000 in January, as per BBG, while the whisper number among Bloomberg terminal users is 120,000
- The Fed's Bostic signaled that the Fed may hold rates steady until late spring or summer due to uncertainty surrounding Trump’s policies and economic conditions. While investors expect no change in March, markets anticipate three rate cuts later this year, aligning with Fed Governor Christopher Waller’s forecast of two to three reductions.
- the Fed's Waller said he wouldn’t support a rate cut in March but sees room for two or possibly three cuts this year if inflation trends toward target. He emphasized the need to monitor the labor market and inflation before making policy changes and reiterated that tariffs are unlikely to have a significant impact on inflation.
- Investors favored the Treasury’s four-week bill auction on Thursday amid uncertainty over the Fed’s rate path, pushing its yield to 4.23%, slightly below the WI bid. Indirect bidders took 67.7% of the four-week supply, exceeding the four-auction average, while the eight-week bill saw weaker demand. Oxford Economics noted that rising rate cut expectations and shrinking auction sizes continue to support bill auctions, as per BBG
- Powell is scheduled to speak later Friday along with New York Fed President John Williams, the FOMC blackout period starts on Saturday
- Later today we have Nonfarms, Unemployment Rate & Consumer Credit
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GOLD: Gold Adds to Overnight Gains.
Feb-05 04:55
- Golds stellar start to 2025 continued today, with bullion hitting new all time highs.
- Having hit new highs yesterday, gold opened in Asia this morning at US$2842.71 and traded up for most of the day reaching a high of $2,858.17.
- China’s retaliation in the trade war yesterday came from Beijing yesterday when they announced tariffs on US energy imports, oil, agricultural equipment, announced key US companies were to be place on a blacklist and that Google were to be investigated for anti-trust violations.
- Whilst the tariff news was brushed off by many equity markets, the USD weakened, giving room for gold to rally.
- Gold enjoys ‘safe haven’ status as an asset, and investors typically buy it in volatile times.
- Equally gold performs well in a rate cutting environment or times when the USD weakens, as seen overnight.
- The day ahead for gold will ebb and flow on any new headlines on tariffs.
- Whilst no ‘new news’ came out of China, the surge in gold today can likely be partly to do with traders playing catch up post Lunar New Year holidays.
INDONESIA: Solid 2024 With Stronger Domestic & Export Growth
Feb-05 04:42
Q4 Indonesian GDP was as expected rising 0.5% q/q and 5.0% y/y up from 4.9% in Q3 leaving 2024 up 5% in line with 2023. Bank Indonesia said in January that it expected 2024 growth to be “slightly below the midpoint of the 4.7-5.5% range” and for Q4 to be “slightly” below expectations due to lower domestic demand. It has cut rates 50bp this cycle and continues to support growth with macroprudential policies given its focus on the rupiah which has been weaker. This should continue in 2025 accompanied by more rate cuts.
- 2024 GDP was below the government’s 5.2% target, while new President Prabowo is aiming for growth to reach 8% during his term and has increased fiscal stimulus plans as a result.
- BI revised down its 2025 GDP range slightly in January to 4.7-5.5% from 4.8-5.6% because of weak private investment.
- Domestic demand slowed slightly in Q4 rising 4.9% y/y after 5.0% in Q3 driven by a slowdown in government consumption growth to 4.2% y/y from 4.6% y/y. Private consumption was slightly stronger at 5.0% y/y from 4.9%, the highest since Q3 2023 and in line with growth over the last three years. GFCF grew at 5.0% y/y after 5.1% in Q3.
- Export growth slowed to 7.6% y/y in Q4 after 9.1% but 2024 saw an improvement to 6.6% from 1.3% the previous year.
- USDIDR is off its Monday high of 16471 helped by BI intervention and market stabilisation following deals to delay US tariffs on Mexico and Canada. USDIDR is at 16309, which is slightly lower than January 15, the last BI decision, which should reassure BI.
Indonesia growth y/y%
Source: MNI - Market News/Refinitiv
US TSYS: Tsys Futures Pare Morning Losses, 10yr Yield at 4.50%
Feb-05 04:20
- Tsys futures were slightly lower in morning trading, however has since pared losses to trade little changed. TU is -00¼ at 102-26⅞, while TY is unchanged at 109-06+.
- Treasury futures continue to trade below their recent highs. A corrective cycle remains in play and the contract is holding on to the bulk of its recent gains. TY key resistance at 109-10, the 50-day EMA, has been pierced. A clear break of it would strengthen a bullish theme and open 109-31, the Dec 18 high. The medium-term trend condition remains bearish. The bear trigger is 107-06, the Jan 13 low. Initial firm support is 108-06, the Jan 23 low.
- Cash tsys yields initially traded 1-2bps higher this morning, however has since reversed those moves with yields now flat to 0.5bps lower. The 2yr is unch at 4.214%, while the 10yr is -0.4bps at 4.507%, the 10yr has traded in a roughly 10bps range for the past two weeks now, while the 2s10s has flattened about 4bps over the same period.
- US Postal Service is stopping inbound parcels from China and Hong Kong in potentially another sign of worsening trade tensions between Beijing and Washington.
