US TSYS: Viewpoint - Is Bessent Increasing Treasury Buybacks ?

The Asian session started off on the back foot with Trump commenting that he had “no plans to talk to Xi this week.” This weak start then got legs as we saw another huge leg lower in USD/Asia driven by the USD/TWD, which caused the USD to trade lower across the board. Asian holidays and thin liquidity have not helped but almost 8% in 2 days is an extreme event and you would expect buyers to reemerge sub 30.00.

• AUD/USD - Asian range 0.6434 - 0.6481, the AUD is currently dealing around 0.6460. The AUD popped up around 40 points on the USD/TWD open and has since drifted back off its highs as bids below 30.00 finally materialize in USD/TWD . The AUD looks to be building a solid bad base from which to move higher again, first target the 0.6600 area. A break below 0.6350 needed to negate this.
• AUD/JPY - Asian range 93.12 - 93.51, price goes into London trading around 93.25.  AUD/JPY has had a powerful extension as shorts are pared back. Price is now moving towards testing the Weekly resistance seen between 94.00/96.00, sellers should remerge here.
• NZDUSD - Asian range 0.5940 - 0.5985, going into London trading around 0.5970. Like the AUD it benefited from the move lower in USD/TWD upon its open. On the day dips back to 0.5900 should continue to find support.
• AUD/NZD - Asian range 1.0814 - 1.0853, the Asian session currently trading 1.0825. Sellers have returned back towards the 1.0850 area.

Fig 1 : AUD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg

TYM5 has traded higher within a range of 111-06+ to 111-13+ during the Asia-Pacific session. It last changed hands at 111-08, up 0-03 from the previous close.

• Futures are trading higher as another huge leg lower in USD/Asia driven by the USD/TWD drives price action in Asia. “Some speculation that Taiwanese life insurers hedging strategies for their US bond holdings may be responsible.”(per BBG)
• No cash market today with a holiday in Japan. 
• Trump says - “NO PLANS TO TALK TO XI THIS WEEK, CHINA AND US OFFICIALS TALKING ABOUT 'DIFFERENT THINGS'”.(per BBG)
• Kato : “We are not considering the sale of US Treasuries as a means of Japan-US negotiations,” Kato spoke in Milan, Italy on Sunday, where he is attending the annual meeting of the Asian Development Bank.(per BBG)
• The 10-year Yield range seems to be 4.10% - 4.45%, with the pivot the 4.30% area for now.
• ISM Services data tonight will be important and will dictate price action tonight. Any move back towards a contraction will get the market worried about growth once more.
• Data/Events :  US ISM Service PMI

ACGBs (YM -6.0 & XM -5.5) are holding cheaper after today’s data drop. 

• Opinion polls suggested that the incumbent Labor (ALP) government would be returned after Saturday’s election with an average 2-party preferred vote of 52.5% to 47.5% in its favour. In the end, this underestimated their support with the Australian Electoral Commission (AEC) currently saying the split was 54.8% to 45.2%, a swing of 2.6% to the ALP.
• ANZ job advertisements rose 0.5% m/m in April versus +0.4% in March.
• The inflation index rose 0.6% m/m in April versus +0.7% in March, according to the Melbourne Institute. Inflation index rose 3.3% y/y versus +2.8% in March.
• There is no cash trading for US tsys in today’s Asia-Pac session with Japan out. Futures are marginally stronger after Friday’s heavy session.
• Cash ACGBs are 5-6bps cheaper.
• Swap rates are 5-7bps higher, with the 3s10s curve flatter.
• The bills strip has bear-steepened, with pricing -2 to -7.
• RBA-dated OIS pricing is flat to 7bps firmer across meetings today, with late 2025/early 2026 leading. A 50bp rate cut in May is given a 2% probability, with a cumulative 105bps of easing priced by year-end (based on an effective cash rate of 4.09%).