CNH: USD/CNH - Continues To Trade Heavy Below 7.0700

The 10-Yr bond future finished the week last week higher at 112-27+, back above the 50-day EMA of 112-26+, but below the 20-day EMA of 112-31+.   

For cash, yields trended higher over the week as the front end underperformed as uncertainty grows over the next Fed Meeting and the likelihood of a rate cut.  The market had priced in a full cut for December but as the uncertainty around that continues, yields may rise.  

• The 2-Yr finished the week at 3.56%, a gain of +8bps.  
• The 5-Yr finished the week at 3.68%, flat on the week.  
• The 10-Yr ended at 4.09%, a rise of 2bps.  The 10-Yr has consolidated back above 4% again, and look set to trade back in the 4.00% - 4.20% range.
• The 30-Yr was at 4.70%, up +5bps for the week. 

The key auction tonight will b e a US$86bn 13-week and US$77bn 26-week bills auction.   The key test will be the US$42bn 10-Yr on the 13th.  

There is no scheduled Tier 1 data tonight.  

ACGBs (YM -1.0 & XM -0.5) are slightly weaker after cash US tsys closed on Friday, little changed, having teetered either side of flat. Risk-off flows after the UofM confidence data supported early on but faltered as Wall Street recovered. 

• The highlight of this week's AUS calendar will be Thursday’s October jobs data. After the unemployment rate rose 0.2pp to 4.5% in September, the release will be monitored to see if there is any stabilisation.
• Last month’s weak employment data triggered a solid ACGB rally, but those gains were more than fully reversed after the much hotter-than-expected Q3 CPI report. (see chart)
• Today, RBA Deputy Governor Hauser speaks at 1030 AEDT on the Outlook for the Australian Economy.
• Cash ACGBs are 1bp cheaper with the AU-US 10-year yield differential at +26bps. At this level, the differential hovers just below the upper bound of its long-established range.
• The bills strip is slightly weaker across contracts.
• RBA-dated OIS pricing is showing a 25bp rate cut in December at an 11% probability, with a cumulative 19bps of easing priced by mid-2026.
• This week, the AOFM plans to sell A$1200mn of the 4.25% 21 December 2035bond on Wednesday and A$800mn of the 1.75% 21 November 2032 bond on Friday.

Bloomberg Finance LP

NZGBs are unchanged after US tsys finished the NY session modestly cheaper on Friday as early risk-off sentiment moderated. 

• On Friday, Republicans rejected Senate Democrats on ACA subsidy as the US Govt shutdown looks to enter it's sixth week next week. However, Bloomberg is reporting, "Senate Republican leader John Thune said a deal is "coming together" as he planned a Sunday vote to end the US government shutdown."
• MNI Tech: A short-term bearish threat in 10-year tsy futures (TYZ5)  remains intact. Sights are on a reversal trigger at 112-06, the Sep 25 low, and the 100-DMA, at 112-07. Clearance of these price points would expose a trendline support at 112-00 - the trendline is drawn from the May 22 low.
• Fed Vice Chair Jefferson (voter) on wanting to proceed slowly, being closer to a neutral level rather than talking on Powell’s “fog”. He does, though, note a meeting-by-meeting stance being especially prudent with a lack of official data.
• Swap rates are little changed.
• RBNZ dated OIS pricing is little changed across meetings. 28bps of easing is priced for November, with a cumulative 37bps by February 2026.
• Today, the local calendar will be empty. The next release of note will be the RBNZ's Inflation Expectations data tomorrow.