AUSSIE 10-YEAR TECHS: (Z5) Marked Lower
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.290 @ 15:39 GMT Dec 11
- SUP 1: 95.170 - Low Dec 10
- SUP 2: 95.166 - 2.0% Lower Bollinger Band
- SUP 3: 94.359 - 1.0% 10-dma envelope
Aussie 10-yr futures remain well toward the bottom of the recent range, having taken out all major support levels in the process. With 95.275 cleared, prices are pushing to new contract lows, opening vol-band support through 95.166 and into 95.166. Any recoveries need to break back above 95.900 to signal near-term bullish traction.
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JGBS: Futures Stronger Overnight But Focus Likely On 30Y After Poor Auction
In post-Tokyo trade, JGB futures closed stronger, +6 compared to settlement levels, after US tsy futures closed firmer.
- MNI INTERVIEW: Fed's Risk Management Cuts Not Enough - Revelio. The U.S. labour market will continue to soften, and the Federal Reserve's 50 basis points of interest rate easing so far this year will not be enough to shore up hiring, private data provider Revelio Labs' chief economist Lisa Simon told MNI.
- MNI BRIEF: Japan Oct Sentiment Posts 6th Straight Rise. Japan's Economy Watchers sentiment index rose for a sixth consecutive month in October, prompting the government to upgrade its assessment from the previous month. The stronger data helped ease some Bank of Japan concerns that private consumption may lose momentum as households struggle with high living costs, though the survey does not directly measure consumption.
- All eyes will be on the 30-year yield today after yesterday’s heavy close (+3.6bps cheaper) following another lacklustre auction. (see chart)
- Today, the local calendar will see Money Supply and Machine Tool Orders.
Source: Bloomberg Finance LP
AUSSIE 3-YEAR TECHS: (Z5) Struck by Strong CPI
- RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
- RES 2: 96.780 - High Jun 26 (cont)
- RES 1: 96.700 - High Sep 12
- PRICE: 96.310 @ 16:15 GMT Nov 11
- SUP 1: 96.280 - Low May 15 (cont.)
- SUP 2: 95.900 - Low Jan 14 (cont.)
- SUP 3: 95.760 - Low 14 Nov ‘24
Having bounced well on the back of the mild US CPI print, Aussie 3-yr futures reversed course last week on strong domestic inflation data containing RBA cut pricing through 2026. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 96.280 as the next major support.
AUSSIE BONDS: Modestly Stronger, Jobs Data Tomorrow
ACGBs (YM +1.0 & XM +2.0) are modestly stronger after US tsy futures closed firmer.
- Looking ahead, Wednesday’s US data is limited to MBA Mortgage Applications and $42bn 10Y Note. Focus on multiple Fed speakers through the session: Williams, Paulson, Waller, Bostic, Miran and Collins.
- Cash ACGBs are 1-2bps richer with the AU-US 10-year yield differential at +25bps.
- The bills strip is little changed across contracts.
- RBA-dated OIS pricing is showing a 25bp rate cut in December at a 9% probability, with a cumulative 16bps of easing priced by mid-2026.
- Interestingly, AU-NZ 1-year forward 3-month swap (1Y3M) spread at 103bps is now at its highest level since 2012.
- Today, the local calendar will see Home Loan data alongside RBA Jones' Fireside Chat.
- However, the highlight of this week's AUS calendar will be Thursday's October jobs data. The unemployment rate rose 0.2pp to 4.5% in September.
- Last month's weak employment data triggered a solid ACGB rally, but those gains were more than fully reversed after the much hotter-than-expected Q3 CPI report.
- The AOFM plans to sell A$1200mn of the 4.25% 21 December 2035bond today and A$800mn of the 1.75% 21 November 2032 bond on Friday.
