JGB TECHS: (Z5) Tilts Higher

• AU government bonds are lower in yield by 1-2.5bps across the curve in Monday trading.  
• The 2-YR ACGB is at 3.51% this morning, following Friday's close of 3.53%.  Last week the two year yield moved higher in the back end of the week, finishing +15bps for the week.  
• The 10-Yr ACGB is at 4.36% this morning having widened by +14bps last week.  
• Bond futures are mixed with the 10-Yr +0.01 at 95.59 and remains well below all major moving averages.  
• The 3-Yr is up +0.01 at 96.40 as it too remains below all major moving averages.  
• The RBA meets tomorrow with markets expecting no change and the cash rate to remain at 3.60%.  
• Other key data out is trade date for August, PMIs and September inflation.  

• NZ government bonds are opening the week marginally better, with yields out to 10-Yr lower by up to -0.5bps.  
• The 2-Yr has been very strong over late, dropping by -25bps in September and is currently at 2.74%.  
• The 10-Yr is starting the week off modestly better at 4.22, having been relatively steady around those levels last week.  
• For the week ahead we have already had out Filled Jobs SA MoM which was inline at +0.2%.  ANZ Activity Outlook and Business Confidence is released as well as Building Permits MoM, Home Value and Commodity prices MoM.  
• The equity market is up modestly at the start of the week by 0.25%, taking it back to flat over the last five days of trading.  

Oil prices were moderately higher on Friday and finished the week up around 4.5% on geopolitical risks particularly stemming from Russia-Ukraine but also the reimposition of UN sanctions on Iran over its nuclear programme. US President Trump increased diplomatic pressure on Turkey to stop buying Russian oil and is likely to do the same with Hungary. Crude was also supported by the softer US dollar (BBDXY -0.3%).

• Ukraine’s President Zelensky said that he expects further EU sanctions on Russia announced this week.
• Brent increased 0.5% to $69.75 following a peak of $70.76 to be up 4.6% last week and 3.4% this month. It broke above initial resistance but key resistance at $71.93 remains intact.
• WTI rose 0.3% m/m to $65.19/bbl after reaching the month’s high of $66.42. It finished up 4.5% on the week and 2.7% in September.
• WTI is currently around $65.04/bbl, a moderate move after exports resumed from Iraqi Kurdistan through the Kirkuk-Ceyhan pipeline on the weekend after a deal was finally reached with Turkey. Flows were halted in March 2023.
• Iraq has revised up its export forecast to 3.65mbd after the resumption of shipments at a time when significant excess supply is forecast for 2026 and OPEC has increased its output target.
• OPEC+ decides production for November on 5 October and is currently expected to increase it by more than the 137kbd for October, according to Bloomberg. It seems that the group is now beginning to unwind the 1.66mbd of previous output cuts as it works to regain market share but Saudi is the main source of spare capacity.
• Oil prices have also been supported by algorithmic traders shifting positions which were 27% net long on Friday from 27% short the day before, according to Bridgeton Research.