MNI EUROPEAN MARKETS ANALYSIS: Subdued Session In Asia

US TSYS: Marginally Pressured In Asia, Narrow Ranges Observed

TYZ3 deals at 108-28+, -0-01+, a 0-06+ range has been observed on volume of ~91k.

• Cash tsys sit 1-2bps cheaper across the major benchmarks, light bear steepening is apparent.
• Tsys have ticked lower through the Asian session in a narrow range in Asia. Losses marginally extended as details of an Israel/Hamas hostage deal crossed however the move has not yet follow through.
• The proximity to tomorrow's US holiday is perhaps keeping participants on the sidelines today. Cross asset flows are muted; BBDXY is unchanged, WTI is a touch below opening levels and e-minis are flat.
• There is a thin docket in Europe today, further out we have Initial Jobless Claims and the UofMich Consumer Sentiment Survey.

JGBs: Bear-Steepening Of JGB Curve Extends After BOJ Rinban Operations, Holiday Tomorrow

In the Tokyo afternoon session, JGB futures are weaker at 146.04, -26 compared to settlement levels, after reaching a new session low of 145.95 in early afternoon dealings. With the domestic data calendar light today, the catalyst for afternoon weakness appeared to be the results of this morning’s BOJ Rinban operations. The operations showed positive spreads and higher cover ratios (1-3-year: 2.57x, 3-5-year: 3.00x, 5-10-year: 1.86x and 25-year+: 2.39x).

• Reuters poll: 85% of economists say BOJ will end negative interest rates in 2024, up from 63% in the October poll.
• Weakness in cash US tsys, 2-3bps cheaper across benchmarks, in today’s Asia-Pac session also weighed on JGBs. That said, US tsy dealings have been relatively subdued as the market approaches the Thanksgiving holiday.
• The cash JGB curve has bear-steepened. The benchmark 10-year yield is 2.2bp higher at 0.725% versus the cycle high of 0.97% set in late October and the BOJ's 1% YCC reference rate. The 20-year yield is 4.8bps higher at 1.454%, fully reversing yesterday's post-20Y auction rally.
• The swaps curve has bear-steepened too, with rates 0.4bp to 5.9bps higher. Swap spreads are wider.
• A reminder that the local market is closed tomorrow for the Labour Thanksgiving holiday. National CPI is due for release on Friday.

ACGBs: Subdued Trading, RBA Gov Bullock Speech Later Today

ACGBs (YM +2.0 & XM flat) are slightly richer after dealing with relatively narrow ranges in the Sydney session. Given the light domestic calendar and the fact that US tsys are in a pre-Thanksgiving mode, the overall trading activity has been subdued.

• Cash US tsys are 1-3bps cheaper in the Asia-Pac session after yesterday’s modest gains. The release of the FOMC minutes yesterday provided no new information, with the report reaffirming the higher-for-longer stance. There was little market reaction. The US calendar later today sees Initial Jobless Claims and the UofMich Consumer Sentiment Survey.
• The latest round of ACGB Dec-34 supply showed mixed demand metrics. It printed 1.0bp through prevailing mids but the cover ratio moved lower and the number of overall and successful bidders dropped substantially.
• Cash ACGBs are flat to 2bps richer, with the AU-US 10-year yield differential 3bps lower at +3bps.
• Swap rates are flat to 2bps lower, with the 3s10s curve steeper.
• The bills strip is little changed, with pricing -1 to +1.
• RBA-dated OIS pricing is +/- 1bp softer across meetings.
• RBA Governor Bullock will deliver a speech at the ABE dinner at 1935 AEDT today.
• Tomorrow, the local calendar sees Judo Bank PMIs (preliminary) for November.

AUSTRALIA: SEEK Job Data Shows Labour Market Continues Easing

SEEK job ad data for October is showing that the NZ labour market continues to ease but isn’t weak with the level above the series average but at its lowest since the Covid-impacted February 2021. The 3-month average is in line with 2019. Ads fell 5.6% m/m to be down 29.4% y/y with declines recorded in all of the largest cities. This should be another piece of information that reassures the RBNZ that the economy is developing in line with its expectations when it meets on November 29.

• Applicants per job rose another 3.9% m/m in September, close to July’s high. SEEK NZ country manager Clark said that “Application levels are again close to a record high, which demonstrates the desire for many workers to make a move ahead of Christmas. For hirers, particularly in industries where worker demand remains high, such as Community Services & Development and Hospitality & Tourism, this should mean greater choice.”

Source: MNI - Market News/SEEK

NZGBS: Slightly Cheaper, Subdued Dealings, Thanksgiving Holiday On Radar

NZGBs concluded the session on a slightly less favourable note, trading 2-3bps cheaper across benchmarks. The overall session remained relatively subdued, marked by an empty local calendar and US tsys adopting a pre-Thanksgiving holiday mode.

• In today's Asia-Pacific session, cash US tsys are 1-2bps cheaper, retracing modest gains from the previous day. The FOMC minutes released yesterday did not provide any groundbreaking information, reiterating the higher-for-longer stance. This resulted in minimal market reaction. Looking ahead, the US calendar for later today includes Initial Jobless Claims and the UofMich Consumer Sentiment Survey.
• Swap rates closed 1-2bps higher, with the 2s10s curve flatter.
• RBNZ dated OIS pricing closed little changed across meetings. Terminal OCR expectations remained at 5.54%.
• Tomorrow, the local calendar is once again empty, ahead of Q3 Retail Sales Ex-Inflation on Friday.
• Tomorrow, the NZ Treasury plans to sell NZ$225mn of the 3.0% Apr-29 bond, NZ$225mn of the 3.5% Apr-33 bond and NZ$50mn of the 2.75% Apr-37 bond.

OIL: Crude Little Changed As Wait For US Stock Data

Oil prices are off their early session highs following confirmation of an Israeli/Hamas temporary ceasefire deal. Crude has been trading in a narrow range ahead of the US holiday but is moderately lower today. WTI is down 0.1% to $77.70/bbl after approaching $78 earlier. Brent is -0.1% at $82.35, off the intraday low of $82.12. The USD index is flat.

• OPEC+ meets this weekend and while an extension of the Saudi and Russian voluntary cuts into 2024 is expected, there is some speculation whether the rest of the bloc will reduce output further because of current softer prices and increased non-OPEC supply. Citibank has estimated a 20% probability this occurs and Goldman Sachs 35%, according to Bloomberg.
• The focus for crude today is likely to be the official EIA US inventory data. Bloomberg reported that there was a 9.05mn barrel crude stock build, according to people familiar with the API data, but gasoline inventories fell 1.8mn and distillate -3.5mn. EIA reported refinery rates will also be of interest.
• Later US jobless claims, October preliminary durable goods orders and final November Michigan consumer sentiment are released.

GOLD: Steady After Strong Gains On Tuesday

Gold is little changed in the Asia-Pac session, after closing +1.0% at $1998.29 on Tuesday, pulling back off highs of $2007.61 with some intraday strengthening in the USD index.

• This was the first time bullion had cleared $2,000/oz in spot trade since late October.
• The precious metal is up around 3% since the beginning of last week, buoyed by falling Treasury yields and a sharp drop in the dollar.
• Technically, well-defined parameters remain in play and bulls remain in control at present, according to MNI’s technical team.
• A stronger resumption of gains would open $2,022.20/oz (the May 15 high). The bull trigger at $2,009.4/oz (the Oct 27 high) provides initial resistance ahead of there.

EQUITIES: APEC Markets Mixed & Range Trading Ahead Of US Thanksgiving

Equity markets have been mixed during the APAC session following US weakness on Tuesday. The MSCI APEX 50 is down 0.3% with China/HK falling but Japan rallying. The Nasdaq e-mini is down 0.1% but S&P is flat ahead of the US holiday on Thursday.

• While HK’s Hang Seng is down only 0.1%, China’s CSI is 0.5% lower but the property component is slightly higher.
• Japan’s Nikkei is 0.3% higher, Korea’s KOSPI up only 0.1% but Taiwan’s TAIEX is down 0.7%, due to semiconductor manufacturer TSMC falling 1.7%. Tech stocks have been weaker after the Nasdaq’s Nvidia fell in after-hours trading despite better profits.
• Australia/NZ are little changed with the ASX down 0.1%. The NZX 50 is up slightly.
• ASEAN is mixed with Indonesia’s Jakarta Comp falling 0.6%, SE Thai -0.8%, Malay KLCI -0.6% but Singapore’s Straits Times is up 0.4% and Philippines PSEi +0.2%.
• India’s Nifty 50 is marginally higher.

FOREX: Narrow Ranges Across G-10 In Asia

There has been narrow ranges across G-10 FX in muted pre-US holiday trade in Asia today. The cross asset space remains muted; US Tsy Yields are marginally higher and e-minis are unchanged. Details of an Israel/Hamas hostage deal crossed however there was little reaction in FX.

• USD/JPY is ~0.1% lower and sits a touch above the ¥148 handle. Technically there is a short term bearish trend for USD/JPY. Support comes in at ¥147.15, Nov 21 low, and ¥146.00, trendline support drawn from Mar 24 low. Resistance is at ¥149.16, 50-Day EMA.
• Kiwi is a touch softer, however a narrow $0.6040/60 range has been observed in Asia.
• AUD/USD is little changed from opening levels. Westpac Leading Index for October printed at -0.03%. Technically the latest rally has resulted in a clear break of former resistance at $0.6522, the Aug 30 and Sep 1 high. Resistance now comes in at $0.6616, High Oct 8. Support is at $0.6453, Low Nov 17.
• There is a thin docket in Europe on Wednesday with no data releases of note, the highlight is the UK Autumn Statement from Chancellor Hunt.

MNI Bank Indonesia Preview - November 2023: IDR Stabilises, Rates On Hold

• Bank Indonesia (BI) unexpectedly hiked rates 25bp to 6% in October to defend the rupiah and since then we have seen some FX stabilisation and IDR appreciation versus the dollar. As a result, BI is likely to keep rates on hold at its November 23 meeting but continue to sound wary regarding the impact of “global uncertainty” on the currency.
• USDIDR is 2% lower since the 19 October meeting and -3.1% since the end of October, back to levels not seen since the end of September. The rupiah has also strengthened against a basket of currencies. One of the reasons given for hiking in October was to “mitigate the impact of imported inflation”. Imported deflation eased recent months in line with the weaker rupiah.
• While BI has a number of existing and new instruments to ensure FX stability, given recent currency depreciation it is unlikely to want to risk destabilising the IDR by easing monetary policy ahead of the Fed. So rates are also likely to be “high for longer” in Indonesia.
• See BI preview here.