JGBS: Wild Ride Higher For 40YY This Week

Most Asian equity bourses advanced today, driven by strong overnight performance on Wall Street and a rally in commodity prices.  The US economy grew at an annualized rate of 4.3% in the third quarter—faster than expected and the fastest pace in two years—boosting investor confidence in the global economic outlook. This news pushed the S&P 500 to a new record high, setting a positive tone for Asian markets today.  The US's ongoing focus on Venezuela gave oil a boost with gold, silver copper near to new highs also.  Tech / AI stocks are again in focus after a positive lead in from US tech overnight.  All of this came despite FED rate cut expectations being pushed out given the strength of GDP.

• The NIKKEI is up flat today on light volumes.  Month to date gains remain modest as the NIKKEI at 50,475 remains near to the 20-day EMA of 50,023.
• The KOSPI also is doing very little, barely above where it started the day as focus in Korea remains on the Won and efforts to stem its ongoing weakness.  
• China's major bourses are mixed with the Hang Seng up +0.17%, the CSI 300 down -0.12%, Shanghai up +0.24% and Shenzhen up +0.60% with the technology sector led the advance today, spurred by reports of potential delays in US tariffs on Chinese semiconductors, easing immediate trade tension concerns.  
• The NIFTY 50 is up +0.14% in early trade, nearing 26,211 and approaching the November high of 26,215.
• SE Asia's major bourses are mixed today, on light volumes.  The SE Thai has barely moved today, whilst the Jakarta Composite is down -0.15% and the FTSE Malay KLCI is up a mere +0.06%

The NZD/USD had a range today of 0.5836-0.5853 in the Asia-Pac session, it is currently trading around {NZD Curncy}. The NZD is probing the 0.5850 area as the USD headwinds were added to in our session by South Korea pushing back on one-way USD strength very much in the same vein as Japan. The NZD is holding above 0.5700-0.5750 and is now building some constructive price action. This 0.5850-0.5900 remains tough resistance though so I still expect sellers to be around up here. On the day, like the AUD it looks a little stretched in the short term so would prefer to fade dips if given the chance, support seen between 0.5790-0.5810.

• (Bloomberg) -- “South Korea’s won strengthened after the authorities said excessive weakness in the currency isn’t desirable and foreign-exchange markets will soon see the government’s “strong determination.”  {NSN T7R48GT96OSN <GO>}
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5700(NZD622m Dec 29) - BBG
• The NZD/USD Average True Range for the last 10 Trading days: 46 Points

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

Aussie bond futures edged up from earlier lows, albeit in a quiet session ahead of the Christmas/NY break. This is consistent with a positive bias in US Tsy and JGB futures so far today. 10yr (XM) edged up to 95.2050, +1.5bps, but we remain within recent ranges. 3yr futures (YM) were unchanged at 95.81. Cash ACGB yields edged down a little, the 3yr to 4.10%, while the 10yr fell to 4.735%. 15 and 30yr tenors saw larger falls, but liquidity was likely lighter today. Note onshore Australian markets return next Monday.