BUND TECHS: (Z5) Bull Cycle Intact

Oil prices have trended higher in today’s APAC trading after rising over last week. WTI is up 0.5% to $63.03 following a peak of $63.13 earlier, while Brent is 0.5% higher at $67.33 after reaching $67.43. Current geopolitical risks are having the opposite effect to supply/demand fundamentals with a large market surplus expected in 2026. The USD index is slightly lower.

• Further sanctions on Russia are being discussed by the EU and US but President Trump has said that NATO needs to stop importing Russian crude (Turkey and Hungary are the main ones} before he’ll impose further restrictions. US Treasury Secretary Bessent said that the G7 should also place duties on countries buying Russian oil.
• Ukrainian attacks on Russian energy infrastructure continued over the weekend.
• China’s August data was generally softer than consensus expected but it didn’t worry oil prices.
• The key event this week is the Fed’s 17 September decision. With a 25bp rate cut widely expected, attention will be on the tone of comments from Chair Powell to gauge the outlook for policy.
• Later US September Empire manufacturing and July euro area trade print. The ECB’s Lagarde and Schnabel speak. 

Following strong opposition from investors, the Korean government's policy to lower the capital gains tax threshold for equity investors has finally been dumped, marking the first major about face for the new government.  The NIKKEI is closed today for a public holiday, having closed Friday at new highs. The focus for investors for the week ahead will be the Federal Reserve meeting this week as markets globally hope for a rate cut.  

• The major bourse in China are off to a good start this week, with the Hang Seng up +0.30%, the CSI 300 +0.85%, Shanghai up +0.22% and Shenzhen up +0.65% on a day when economic data shows the economy continues to expand.  
• The KOSPI is up on the taxation news, by +0.50%.  
• The TAIEX in Taiwan one of the few decliners, down -0.20%.  
• The Jakarta Composite is up +0.75%
• The NIFTY 50 is opening with modest falls of -0.05%.  

ACGBs (YM -3.0 & XM -6.0) are weaker and hovering near session lows on a relatively subdued session.

• There has been no cash US tsy trading today with Japan out. TYZ5 is moderately cheaper.
• Cash ACGBs are 3-6bps cheaper with the 3/10 curve steeper.
• The bills strip is flat to -4 across contracts with a steepening bias.
• RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut in September is given a 9% probability, with a cumulative 28bps of easing priced by year-end.
• Today, the local calendar was empty ahead of an RBA Hunter's Fire-Side Chat tomorrow.
• The focus this week, however, will be on Thursday's August jobs data. Employment is forecast to rise 21k after July's +24.5k with the unemployment rate expected to remain at 4.2%. It will also be important to monitor underemployment, the split between full-time & part-time and hours worked. The RBA is currently expected to leave rates unchanged on September 30 as it waits for Q3 CPI on October 29.
• This week, the AOFM plans to sell A$1200mn of the 4.25% 21 December 2035 bond on Wednesday and A$1000mn of the 1.00% 21 December 2030 bond on Friday.