AUSSIE BONDS: Weaker, Light Calendar, Narrow Ranges
Feb-08 01:24
ACGBs (YM -3.0 & XM -2.5) are weaker after trading in narrow ranges during the Sydney. With the domestic calendar empty, local participants are likely on headlines watch and monitoring US tsys after yesterday’s moderate rise in yields. Cash US tsys are currently dealing little changed in today’s Asia-Pac session.
- (AFR) A Big Four bank predicts inflation will fall faster than expected and be back within the Reserve Bank of Australia’s target range by October, stoking hope interest rates will fall faster. (See link ICYMI)
- Cash ACGBs are 2-3bps cheaper, with the AU-US 10-year yield differential 1bp wider at +1bp.
- Swap rates are 1-3bps higher, with the 3s10s curve steeper.
- The bills strip has bear-steepened, with pricing flat to -4.
- RBA-dated OIS pricing is flat to 2bps softer across meetings. A cumulative 45bps of easing is priced by year-end.
- TCorp has announced its intention to auction A$500mn of its existing 3.00% Feb-30 and 2.00% Mar-31 benchmark bonds. Bids were accepted via Yieldbroker from 10:45 to 11:00 local time.
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Historical bullets
CNH: USD/CNY Fixing Steady
Jan-09 01:20
The USD/CNY fixing printed at 7.1010, versus a Bloomberg estimate of 7.1490.
- Today's fix is a -480pip surprise in USD/CNY terms, little changed versus -492pips yesterday.
- The actual fix was very similar to yesterday's outcome (7.1006).
- USD/CNH hasn't been able to spend any time sub 7.1600 so far today, the pair back to 7.1640 in recent dealings.
JGBS: Bull-Flattening, Tokyo CPI Close To Expectations
Jan-09 01:07
In Tokyo morning trade, JGB futures are holding a downtick, -3 compared to settlement levels, after returning from yesterday's holiday.
- This comes after Dec Tokyo CPI figures were close to expectations. Headline CPI printed at 2.4%y/y (against a 2.5% forecast, and 2.7% prior). The ex fresh food category was 2.1% y/y in line with forecasts (2.3% prior). The ex fresh food, energy index rose 3.5% y/y, also in line with expectations (prior was 3.6%).
- Overall, the CPI data continues to show moderation in inflation pressures, albeit with core's much more gradual than the headline. Base effects will be less supportive for further headline falls as we progress through 2024.
- Elsewhere, cash US tsys are dealing ~1bp richer across benchmarks in today's Asia-Pac session. The market remains focused on US CPI/PPI inflation measures on Thursday/Friday respectively.
- The cash JGB curve bull-flattened, with yields flat to 1.3bps lower. The benchmark 10-year yield is 0.7bp lower at 0.603% versus the Nov-Dec rally low of 0.555%.
- Swap rates are slightly higher across all maturities. Swap spreads are wider.
JPY: USD/JPY Back Sub 144.00
Jan-09 01:02
USD/JPY has drifted lower into the Tokyo fix. The pair last at 143.90/95, around 0.20% stronger in yen terms versus end Monday levels in NY.
- Some modest support is evident from lower US TSY levels, although there hasn't been any follow through to the initial move lower.
- Tokyo CPI came and went without much yen impact, with the print close to expectations.
- Monday lows for the pair at 143.66 remain intact for now. Opening levels were at 144.23.
