AUSSIE BONDS: Holding Richer After CPI Data But Off Bests
Jan-08 04:13
ACGBs (YM flat & XM -4.0) are mixed but 2-4bps stronger versus pre-CPI Monthly levels.
- While November headline inflation picked up 0.2pp to 2.3% y/y, the focus was on trimmed mean today given current state & federal electricity rebates. This underlying measure eased 0.3pp to 3.2% to where it was in September.
- However, the RBA continues to focus on quarterly CPI data and it wants to be confident that inflation will return sustainably to the band. It is too early to tell if monthly inflation is trending lower again, thus attention will be firmly on Q4 CPI on January 29.
- Cash ACGBs are flat to 4bps cheaper, with a steeper curve. The AU-US 10-year yield differential is at -17bps.
- The swaps curve has bear-steepened, with rates flat to 4bps higher.
- The bills strip is slightly mixed, but 1-3bps richer after the data.
- RBA-dated OIS pricing is 1-4bps softer across meetings after the data, with July leading. A 25bp rate cut is back to being more than fully priced by April (117%), with the probability of a February cut standing at 64%.
- Before the data, the likelihood of a 25bp cut in April had slipped to 98%.
- The local calendar shows retail sales and trade balances tomorrow.
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FOREX: US Dollar Stronger Again, Yen Outperforming G10
Dec-09 04:11
The US dollar has continued to strengthen during APAC trading with the BBDXY USD up 0.2% and close to its intraday high. Thus the G10 has seen broad-based weakness against the greenback except for the yen, as was the case on Friday. NZD, NOK and EUR have depreciated the most.
- NZDUSD is down 0.3% to 0.5813, close to the intraday low. The government announced that it would go ahead with a capital injection into Kiwibank of around NZ$500bn. It wants to increase competition in the banking sector.
- Ahead of Tuesday’s RBA decision, AUDNZD is 0.2% higher at 1.0983. The RBA is unanimously expected to leave rates at 4.35%, whereas the RBNZ has eased 125bp this year to 4.25%. AUDUSD is down 0.1% to 0.6384, close to the intraday trough.
- USDJPY has range traded between 149.70 and 150.10. The pair is currently little changed at 149.95. AUDJPY is down 0.1% to 95.74.
- EURUSD is down 0.3% to 1.0537, close to the intraday low. NOK and SEK are also lower leaving the crosses against the euro little changed. EURCHF is down 0.1% to 0.9274 and EURGBP -0.1% to 0.8282.
- Equities are generally lower with the Hang Seng down 0.6%, ASX -0.2% but Nikkei up 0.2% and S&P e-mini flat. Oil prices are moderately higher with WTI +0.4% to $67.46/bbl. Copper is slightly lower and iron ore is steady around $104/t.
- Later November NY Fed 1-year inflation expectations print and ECB’s Cipollone and BoE’s Ramsden speak. The Fed is in its pre-meeting blackout period.
ASIA STOCKS: Strong flows into the Indian market Continue.
Dec-09 03:50
- India’s inflows continued on Thursday, capping off a very strong five-day period.
- South Korea: Recorded outflows of -$175m yesterday, bringing the 5-day total to -$158m. YTD flows remain positive at +$3.798bn. The 5-day average is -$32m, the 20-day average is -$172m and the 100-day average of -$156m.
- Taiwan: Experienced outflows of -$30m yesterday, with total inflows of +$2,616m over the past 5 days. YTD flows are negative at -$16.295bn. The 5-day average is +$523m, the 20-day average of -$229m and the 100-day average of -$199m.
- India: Saw inflows of +$1,120m as of Thursday, with a total inflow of +$2,886m over the previous 5 days. YTD inflows stand at +$4.354bn. The 5-day average is +$577m, the 20-day average of +$79m and the 100-day average of -$6m.
- Indonesia: Posted outflows of -$11m yesterday, bringing the 5-day total to +$67m. YTD flows remain positive at +$1.534b. The 5-day average is +$13m, the 20-day average is -$42m the 100-day average of +$17m.
- Thailand: Recorded outflows of -$47m as of Wednesday, totaling -$77m over the past 5 days. YTD flows are negative at -$3.864bn. The 5-day average is -$15m, the 20-day average of -$15m the 100-day average of -$5m.
- Malaysia: Experienced outflows of -$33m yesterday, contributing to a 5-day outflow of -$171m. YTD flows stand at -$476m. The 5-day average is -$34m, the 20-day average of -$38m the 100-day average of -$6m.
- Philippines: Saw outflows of -$7m yesterday, with net outflows of -$33m over the past 5 days. YTD flows are negative at -$338m. The 5-day average is -$7m, the 20-day average of -$12m the 100-day average of +$2m.
BONDS: NZGBS: Bull-Flattener To Start The Week
Dec-09 03:49
NZGBs closed flat to 4bps richer, with a flatter 2/10 curve, after a data-light local session. The next key release is Mfg Activity Volume on Wednesday. Across the ditch, the RBA will deliver its policy decision tomorrow.
- New Zealand government is pushing ahead with moves to increase banking competition by boosting Kiwibank and taking steps to ensure the Reserve Bank places greater importance on competition in the sector, Finance Minister Nicola Willis says. (per BBG)
- “New Zealand is often seen as the little brother against the Aussies. We’re trying to give that little brother a little bit more muscle to get a fairer deal for Kiwis”: Willis
- Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after Friday’s modest post-payrolls gains. As a reminder, the Federal Reserve entered its self-imposed blackout at midnight Friday through December 19.
- Swap rates closed 2-4bps lower.
- RBNZ dated OIS pricing closed flat to 2bps softer across meetings. 44bps of easing is priced for February, with a cumulative 105bps by November 2025.
- On Thursday, the NZ Treasury plans to sell NZ$250mn of the 0.25% May-28 bond, NZ$225mn of the 4.50% May-35 bond and NZ$25mn of the 2.75% Apr-37 bond.
