AUSSIE BONDS: Yields Track US Move Lower, But AU-US 10yr Holding Recent Gains

Trump has posted via Truth Social, arguing that overregulation is threatening AI investment, which he notes is a key driver of US economic growth. He calls for one Federal Standard regulation to oversee the sector (rather than individual ones at the state level). This comes as cracks emerge in the tech equity outlook, amid concerns around valuations and the AI/chip related investment outlook. The SOX semiconductor index has fallen sharply in recent sessions (down a further 2.31% in Tuesday US trade). We are around 11.4% off late Oct highs for this index. Note tomorrow after the US close, Nvidia results are also due. Full Trump post below: 

• Trump via Truth Social: "Investment in AI is helping to make the U.S. Economy the “HOTTEST” in the World — But overregulation by the States is threatening to undermine this Growth Engine. Some States are even trying to embed DEI ideology into AI models, producing “Woke AI” (Remember Black George Washington?). We MUST have one Federal Standard instead of a patchwork of 50 State Regulatory Regimes. We can do this in a way that protects children AND prevents censorship!" 

NZGBs are slightly richer after US tsys garnered a haven bid on the drop in risk appetite and as Fed rate cut bets rebounded. US tsys finished flat to 4bps richer, with the curve steeper.

• US equities slide for a 4th straight session ahead of Nvidia earnings (Wednesday after close).
• Private sector payroll data has suggested US labour market weakness as we await Thursday's employment report for September. The ADP NER Pulse reports -2.5k private sector jobs lost over the four weeks to Nov 1 on a week-on-week basis. It follows a downward revision of -14.25k (-11.25k) in the previous week to Oct 25 and 4.75k (6.25k previously) in the week to Oct 18.
• The NAHB housing market index was roughly as expected in its November release at 38 (cons 37), slightly extending what had been a 5-point increase to 37 in October.
• ICYMI, NZ Treasury issued NZ$6bn of May 2036 nominal bond after a syndicated tap yesterday.
• NZ producer output prices rose 0.6% q/q in Q3.
• Swap rates are 1-2bps lower, with the 2s10s curve flatter. Nonetheless, it remains at its steepest since 2021. (see chart)
• RBNZ dated OIS pricing is little changed across meetings. 25bps of easing is priced for November, with a cumulative 33bps by February 2026.

Bloomberg Finance LP

Trading in recent months has been characterised by concerns over excess supply pushing prices lower and an expansion of sanctions on Russia driving them higher. Prices rose on Tuesday following comments from EU foreign minister Kallas that increased expectations of stricter restrictions on Russia. The announcement of new US/EU sanctions in October pressured Russia’s Urals benchmark and it is down further this week. Reports of another US oil inventory build may pressure prices on Wednesday.

• Kallas said that Russia’s actions against the EU constitute “state-sponsored terrorism” prompting expectations of further sanctions. There have been numerous incursions of airspace over recent weeks.
• WTI rose 1.3% to $60.69/bbl after a high of $60.93. It had traded below $60 through Tuesday’s APAC and early European sessions before breaking above. Initial resistance is at $62.59 with the bear trigger at $55.96.
• Brent is up 0.9% to $64.78/bbl off the intraday peak of $65.10, holding below resistance at $65.95. The bear trigger is at $59.97.
• Ukrainian attacks on Russian refineries and sanctions on Russian majors Rosneft and Lukoil, which are due to be imposed on Friday, have increased concerns over diesel supplies driving prices higher. ICE gasoil prices rose 6.4% yesterday. The restrictions already appear to be having an effect with some Asian purchases out on hold and ICE reporting that physical diesel deliveries will have to be from non-Russian crude.
• Bloomberg reported that there was a US crude inventory build of 4.4mn barrels last week after an increase the week before, according to those familiar with the API data. Product stocks were higher too with gasoline +1.5mn and distillate +600k. The official EIA data is out on Wednesday.