EM ASIA CREDIT: Xiaomi: large order intake, positive

TYM5 is trading 110-13+, down 0-03 from its close.

• The US 2-year yield opens around 3.957%, down 0.02 from its close.
• The US 10-year yield opens around 4.445%, unchanged from its close
• In supply, the 2Y Note was well digested (1bp trade-through was the best since February), helping consolidate Treasury gains through the afternoon session.
• “Sale of $69 billion 2-year notes was solid, trading 1bp through the WI yield with bidding statistics broadly solid, the $70 billion 5-year sale tomorrow will be a sterner test of the Street’s demand.”(BBG)
• “The US Treasury cut the size of its four- and eight-week bill auctions for the first time since February.”(BBG)
• The 10-year looks likely to see supply on any dips in yield in the short-term, should yields hold above 4.35/40% the target looks to be the 4.75% area. Watch for any announcements relating to the SLR, this could have an impact on a market that is already quite short.
• Data/Events: Wednesday's calendar includes more regional Fed surveys (Richmond services/manufacturing, Dallas services) and an appearance by FOMC's Kashkari, with supply including 2Y FRN and 5Y Note. We then get the minutes of the May FOMC meeting in the afternoon.

The deterioration in the labour market appears to have stabilised but a recovery is yet to begin. Filled jobs in April fell 0.1% m/m to be down 1.7% y/y after a 0.1% m/m rise in March but it was also down 1.7% y/y. Vacancies are off their 2024 lows but remain depressed despite rising in March & April. The RBNZ is widely expected to cut rates 25bp today but the focus will be on the updated OCR trajectory and if it signals a possibility of policy going stimulatory.

• Primary industries saw a 0.1% m/m rise in filled jobs, a sector that has seen strong external demand lately. However, goods-producing sectors fell 0.3% m/m and services -0.1% m/m.
• In annual terms, construction jobs are down 6.5% y/y and admin services -6.7% y/y. Retail is down 1.5% y/y.
• Young people have felt the brunt of labour shedding with filled jobs for 15-19 year olds down 10% y/y and 20-24 years -3.9% y/y.
• April SEEK job ads rose 1.1% m/m but are still down 9.6% y/y. 3-month momentum though has been positive this year. Labour supply remains robust with applicants per job ad up 17.5% y/y but the ratio down 3.1% m/m in March, the sharpest monthly drop in over 2 years as migration eases.

NZ job ads vs filled jobs

In post-Tokyo trade, JGB futures closed flat compared to settlement levels.

• Overnight, US equities, US tsys and the DXY climbed following the long weekend. Last week's EU tariff jitters were assuaged after President Trump delayed the planned 50% duty on June 1 following a phone call between him and the European Commission President von der Leyen where she said trade talks would be fast-tracked.
• Better-than-expected data added to risk-on sentiment that saw the NASDAQ spike ~2.5%, the S&P 500 climb ~2%, and the Dow advance ~1.75%.
• “Japan's Finance Ministry will hold a meeting for primary dealers of Japanese government bonds on June 20, Nikkei has learned, and what may be on the agenda is spurring speculation over cutbacks to the ultralong-term bond supply." That's of potentially heightened interest given Reuters' earlier reporting that the MOF will consider skewing the composition of its current issuance programme away from super-long-end instruments (which saw a strong JGB rally overnight).
• Bloomberg - " The US government is poised to receive a so-called golden share in United States Steel Corp. as a condition for approving Nippon Steel Corp's proposed acquisition of the American company."
• Today, the local calendar will be empty apart from 40-year supply.