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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
- There has been a muted session across G-10 FX in Asia; the Yen is a touch pressured however ranges remain narrow, and the Antipodeans are marginally firmer. USD/JPY sits at ¥142.60/65 ~0.2% higher today, the ¥143 handle remains intact. AUD/USD is ~0.2% firmer, the Aussie is marginally outperforming in the space, and is consolidating above the $0.68 handle.
- Equity markets have generally followed the US higher in APAC trading today driven by optimism that the start of the Fed’s easing cycle is not too far away. The S&P and Nasdaq e-minis are unchanged in thin trading. The MSCI APEX 50 is up 1.7%.
- Elsewhere regional FI and US Tsys are muted and Oil prices have held onto most of their gains from yesterday. Gold is slightly weaker in the Asia-Pac session, after closing 0.7% higher at $2067.81 on Tuesday.
MARKETS
US TSYS: Marginally Richer In Asia
TYH4 deals at 112-22+, -0-00+, a 0-05+ range has been observed on volume of 27k.
- Cash tsys sit 1-2bps richer across the major benchmarks, light bull flattening is apparent.
- Tsys are a touch firmer in Asia today, support in the space was seen after a bid in JGBs spilled over however the move didn't follow through. Tsys held richer dealing in narrow ranges for the majority of the session.
- FOMC dated OIS now price ~90bps of cuts by November 2024.
- Due today are the Richmond Fed Mfg Index and Dallas Fed Services Activity, we also have the latest 5-Year supply.
JGBs: Futures Richer & At Session Highs, Retail Sales & IP Data Tomorrow
JGB futures are richer and at session highs, +28 compared to the settlement levels.
- There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined BoJ Opinion Summary for the December MPM. November Housing Starts are due later today.
- Cash US tsys are dealing 1-2bps richer across the major benchmarks in muted Asia-Pac dealing.
- Cash JGBs are richer across benchmarks, with yields -0.3bp (1-year) to -2.7bps (7-year). The benchmark 10-year yield is 2.0bps lower at 0.615% versus the recent low of 0.555% (20 Dec).
- Swaps are richer across maturities, with rates 1.5bp to 2.9bps lower. Swap spreads are tighter.
- Tomorrow, the local calendar sees November Retail Sales, Industrial Production (flash reading) and Weekly International Investment Flows.
AUSSIE BONDS: Richer, Off Best Levels, Light Local Calendar
ACGBs (YM +1.0 & XM +2.0) are richer but off Sydney session highs on a light data day. With the local market lacking news flow, domestic participants appear to have used US tsy dealings in today’s Asia-Pac session for directional guidance after being closed on Monday and Tuesday for the Christmas holiday period.
- Cash US tsys are dealing 1-2bps richer across the major benchmarks in a relatively muted start to Wednesday's dealing.
- Cash ACGBs are 2-3bps richer, with the AU-US 10-year yield differential at +10bps.
- Swap rates are 3-4bps lower.
- The bills strip is firmer, with pricing flat to +4. Early reds are leading.
- RBA-dated OIS pricing is flat to 3bps softer across meetings, with Nov’24 leading.
- Tomorrow, the local calendar is empty again.
- Details on issuance plans (including any new planned bond lines) for the second half of 2023-24 will be provided on 5 January 2024 by the AOFM.
NZGBS: Richer In A Data-Light Session, Local Calendar Empty Again Tomorrow
NZGBs closed with a twist-flattening of the 2/10 curve. Benchmark yields were 1bp higher to 6bps lower. With the local calendar empty today, domestic participants have likely used US tsy dealings in today’s Asia-Pac session for directional guidance.
- As a reminder, the local market was closed Monday and Tuesday this week for the Christmas holiday period.
- Cash US tsys are dealing flat to 3bps richer across the major benchmarks, with a flattening bias, in muted Asia-Pac dealing.
- Swap rates closed 5-8bps lower, with the 2s10s curve flatter.
- RBNZ dated OIS pricing closed flat to 2bps softer across meetings.
- (Bloomberg) The RBNZ was unable to publish some data to its website at 3 pm local due to technical difficulties, according to an emailed statement. It will publish data, including Exchange Rates and TWI, as soon as the issue is resolved.
- Tomorrow, the local calendar is empty again.
GOLD: Higher & Looking At Its First Annual Gain In Three
Gold is slightly weaker in the Asia-Pac session, after closing 0.7% higher at $2067.81 on Tuesday.
- Tuesday’s move came despite a slight shift higher in US Treasury yields, led by the short end. The session was however data-light, with volumes subdued. European exchanges were closed for the Boxing Day holiday.
- Nevertheless, FOMC-dated OIS is pricing in a nearly 80% chance of a cut by March, with ~90bps of easing by November 2024.
- Typically rate cuts are bullish for non-interest-bearing assets like bullion.
- Bullion is trading near a record high, up 13% for the year and on track for its first annual increase in three years.
OIL: Crude Holds Onto Tuesday’s Gains, API Data Out Later
Oil prices have held onto most of their gains from yesterday. On Tuesday they rose around 2.5% and today are little changed. WTI has moved in a narrow range during APAC trading today and is 0.1% lower at $75.47/bbl, off the low of $75.15. Brent is flat at $81.06, close to the intraday high. The USD index is slightly higher.
- There are increasing concerns that tensions are spreading in the Middle East with the Iran-backed Houthis firing on shipping in the key Red Sea and the US striking targets in Iraq. Danish shipping giant Maersk has said that it will resume cargoes through the Red Sea/Suez Canal given the naval protection now provided, which may have helped put a lid on oil prices today.
- Brent’s 200-day moving average is at $80.11 with the 50-day trending down and currently at $81.33. It will be seen as bearish if it falls below the 200-day average, a so-called death cross, according to Bloomberg.
- US API crude inventory and product data are released later. Apart from that there are only the US’ Richmond and Dallas Fed indices for December.
Equities: Higher During APAC Trading Helped By Rate Cut Optimism
Equity markets have generally followed the US higher in APAC trading today driven by optimism that the start of the Fed’s easing cycle is not too far away. The S&P and Nasdaq e-minis are unchanged in thin trading. The MSCI APEX 50 is up 1.7%.
- Japan’s Nikkei is 1.2% higher and the Topix +1.1%. While Korea’s KOSPI is +0.1% (held back by the finance sector), the KOSDAQ is +1.1%. Taiwan’s TAIEX is up 0.6%.
- HK’s Hang Seng is up 1.5% with the tech index rallying 2.3%. China’s CSI 300 has underperformed rising only 0.4% (property +0.3%). China signalled that it may ease restrictions on gaming and that it would create an “initial comprehensive computing power infrastructure system” by end-2025, according to Bloomberg.
- Australia’s ASX 200 is up 0.9% but down off the intraday high. The NZX 50 did not do as well rising 0.4%.
- ASEAN is mixed with Indonesia’s Jakarta comp up 0.6%, Singapore’s Straits Times +0.4%, the Malay KLCI +0.2% but the SE Thai flat and the Philippines PSEi down 0.5%.
- India’s Nifty 50 is 0.5% stronger.
- There is little on the upcoming US calendar with only the Richmond and Dallas Fed indices for December later.
FOREX: Muted Session Across G-10 In Asia
There has been a muted session across G-10 FX in Asia; the Yen is a touch pressured however ranges remain narrow, and the Antipodeans are marginally firmer. Cross asset flows remain subdued this morning.
- USD/JPY sits at ¥142.60/65 ~0.2% higher today, the ¥143 handle remains intact. Trend conditions remain bearish, immediate support is at ¥141.87 (22 Dec low) and ¥140.97, low from Dec 14. Resistance comes in at ¥144.96, high from Dec 19.
- AUD/USD is ~0.2% firmer, the Aussie is marginally outperforming in the space, and is consolidating above the $0.68 handle.
- Kiwi is ~0.1%, ranges have been narrow as NZD/USD holds above the $0.63 handle this morning.
- Elsewhere in G-10 there are no moves of note to report.
- The docket in Europe is thin today.
UP TODAY (TIMES GMT/LOCAL)
- US Data/Speaker Calendar (prior, estimate)
- Dec-27 1000 Richmond Fed Mfg Index (-5, --)
- Dec-27 1000 Richmond Fed Business Conditions (-9, --)
- Dec-27 1030 Dallas Fed Services Activity (-11.6, --)
- Dec-27 1130 US Tsy 17W Bill and $70B 42D CMB Bill auctions
- Dec-27 1300 US Tsy $26B 2Y FRN Note and $58B 5Y Note auctions
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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