AUSSIE BONDS: Twist-Steepener, Still Wary Of AU-US 10Y Narrowers
Nov-14 01:38
ACGBs (YM +1.0 & XM -3.0) are mixed as the short-end consolidates yesterday’s post-jobs sell-off while the long-end follows global yields higher.
- Cash US tsys are 3-5bps cheaper in today's Asia-Pac session after yesterday's bear-steepener. Renewed scepticism over prospects of a Fed cut in December received a boost from recent commentary from Fed officials.
- Cash ACGBs have twist-steepened, with yields 1bp lower to 3bps higher.
- The AU-US 10-year yield differential is at +33bps. At this level, the differential is through the top of its well-defined +/- 30bps trading range (see chart).
- However, with the market still pricing in almost a 40% chance of a 25bps cut by mid-2026, AU-US 10-year differential narrowing trades may still be premature.
- RBA-dated OIS pricing is showing a 25bp rate cut in December at a 1% probability, with a cumulative 10bps of easing priced by mid-2026.
- The bills strip is flat to +2 across contracts.
Bloomberg Finance LP
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MNI: CHINA SEP CPI -0.3% Y/Y VS MEDIAN -0.2%; AUG -0.4%: NBS
Oct-15 01:32
- CHINA SEP CPI -0.3% Y/Y VS MEDIAN -0.2%; AUG -0.4%: NBS
- CHINA SEP CPI +0.1% M/M VS +0.0% M/M AUG
- CHINA SEP FOOD PRICES -4.4% Y/Y VS -4.3% Y/Y AUG
- CHINA SEP NON-FOOD PRICES +0.7% Y/Y VS +0.5% Y/Y AUG
- CHINA SEP PPI -2.3% Y/Y VS MEDIAN -2.3%; AUG -2.9%: NBS
- CHINA SEP PPI +0.0% M/M VS +0.0% M/M AUG
MNI: CHINA PBOC CONDUCTS CNY43.5 BLN VIA 7-DAY REVERSE REPO WEDS
Oct-15 01:28
- CHINA PBOC CONDUCTS CNY43.5 BLN VIA 7-DAY REVERSE REPO WEDS
CNH: USD/CNY Fixing Under 7.1000, Fresh YTD Lows, CNH Rallying
Oct-15 01:26
The USD/CNY fix has printed under 7.1000 for the first time this year. At 7.0995 we are well under the market expectation of 7.1320. This leaves the fixing error around recent wides at -325pips. CNH has rallied post the fixing outcome and broader USD sentiment is also softer.
- Today's fixing outcome will reinforce the resilient yuan backdrop even in the face of renewed US-China tensions. This point is reinforced by the chart below, which plots the USD/CNY fixing against the BBDXY index.
- For USD/CNH, we are back under 7.1300, which isn't too far from recent lows (7.1240). Focus will be on whether we can test back under 7.1000. This may be a bridge too far in the near term, until we see greater clarity on the US-China outlook. Still, today's fixing is likely to help cap the topside around the 7.1500 region.
Fig 1: USD/CNY Fixing Versus BBDXY Index
Source: Bloomberg Finance L.P./MNI
