AUSSIE 10-YEAR TECHS: (Z5) Reversal Lower Extends

The AUD/USD had a range overnight of 0.6582-0.6620, Asia is trading around 0.6585. US stocks are back at their highs even after record revisions to the payrolls data, nothing stops this train. The AUD had a look above 0.6600 but stalled as the market awaits the US inflation data this week. The AUD remains in its recent multi-month range of 0.6350-0.6650, should the USD break and extend lower we could potentially see the AUD break back above 0.6650. Should this occur it could provide the upward momentum to target levels back towards 0.6900/0.7000. Although still in the range the bias will be for dips back to 0.6500 to be supported for now.

• Bloomberg - “Australia’s sovereign wealth fund said it’s reduced exposure to US markets and is keeping close tabs on President Trump's pressure campaign against the Federal Reserve. The fund has increased exposure to Australian Assets to “protect against inflation and currency volatility” and has also been diversifying its exposure to developed market currencies and commodities.”
• MNI BRIEF: China Manufacturing Outpaced Economy In August. China’s manufacturing sector outpaced the broader economy in August, with sales revenue growth 1.5 percentage points higher than the nationwide average, according to a notice released Tuesday by the State Taxation Administration. The need for Beijing to deploy additional large-scale stimulus such as extra special treasuries this year is fading as the economy stays on track to meet its 5% growth target, experts told MNI.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6550(AUD797m). Upcoming Close Strikes : 0.6650(AUD597m Sept 11) - BBG
• CFTC Data last week shows Asset managers reduced their shorts for the first time in a while -66025(Last -78758), the Leveraged community though look to be rebuilding their own shorts after winding them down -11860(Last -6447).

Fig 1: AUD/USD spot Daily Chart

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

TYZ5 reopens at 113-07, down 0-04 from closing levels in today’s Asia-Pac session.

• Overnight the US 10-year yield had a range of 4.0359% - 4.0894%, closing around 4.0875%. 
• Treasury yields retraced higher overnight as market prepares for the coming inflation data; the front-end led the move and this saw the yield curve flatten (2s10s -2.43 at 52.709, 5s30s -1.63 at 111.325).
• MNI US DATA: Prelim. NFP Annual Revision More Negative Than Median But Within Ranges. US payroll growth in the year through March was reduced by a record 911,000 in the BLS’s preliminary revision. 
• Taking these revisions at face value (which history suggests is likely overly negative), the average pace of monthly payrolls growth of 147k in the twelve months to Mar 2025 would have been 71k.
• As for private payrolls, the -880k preliminary downward revision implies average monthly private payrolls growth would be revised down from 122k to 49k.
• (Bloomberg) -- “When all the revisions for 2024 and 2025 are complete - we won’t get the final revisions until early in 2026 and 2027 - we expect they’ll show the business cycle peaked around April 2024. It’s possible the economy is either still in recession or is in the early phase of a new business cycle”
• 10-Year Yields have broken through its support as the market reacts to a labour market that is rapidly cooling. This move should now see buyers return on bounces with the first buy-zone back towards 4.20%. First target the 4.00% zone then the 3.80% area.

Fig 1: 10-Year US Yield 2H Chart

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

US President Trump has posted via Truth Social that he is pleased to announce that the US-India are continuing negotiations around addressing trade barriers, see the full post below. The post adds he looks forward to talking with Indian PM Modi in coming weeks. 

• "I am pleased to announce that India, and the United States of America, are continuing negotiations to address the Trade Barriers between our two Nations. I look forward to speaking with my very good friend, Prime Minister Modi, in the upcoming weeks. I feel certain that there will be no difficulty in coming to a successful conclusion for both of our Great Countries!"
• This comes after similar remarks earlier this week which appeared to suggest some softening in Trump's stance towards India.
• PM Modi posted earlier this week: "Deeply appreciate and fully reciprocate President Trump’s sentiments and positive assessment of our ties. India and the US have a very positive and forward-looking Comprehensive and Global Strategic Partnership." via X.
• Still, earlier headlines from the FT stated: "*TRUMP ASKS EU TO HIT CHINA, INDIA WITH 100% TARIFFS: FT *US PREPARED TO MIRROR ANY EU TARIFFS ON CHINA, INDIA: FT *TRUMP SEEKS TARIFFS FROM EU TO PUT PRESSURE ON RUSSIA: FT" - via BBG