- It was a rather subdued Asia trading session today, with most of Asian out on Public Holidays notably Japan, China & South Korea, as such each respective equity market was closed along with JGB and US tsys cash trading.
- USD/JPY briefly broke below 140.00, the first break of this level since July 2023, the pair has recovered a touch to trade at 140.17 heading into the European open
- There was another assassination attempt on Donald Trump, with some betting agencies seeing a slightly bounce in his favor post the attempt.
MARKETS / UP Today
US TSYS: Tsys Futures Edge Higher, Volumes Low With Asia Out
- Global rates are slightly higher, most of Asia out for a public holiday, with both JGBs & US tsys trading closed for the session. Tsys futures jumped slightly higher on the open, before paring some gains. TYZ4 is back to trading near session highs, however volumes have been on the low side.
- TUZ4 is outperforming +00⅞ at 104-11⅛ while TYZ4 is + 01 at 115-14+.
- The trend in TYZ4 is higher with the latest pullback is considered corrective. Wednesday’s initial rally resulted in a print above key resistance and the bull trigger at 115-19, the Aug 5 high. The move higher confirms a resumption of the uptrend and paves the way for a climb towards the 116.00 handle. MA studies remain in a bull-mode position with firm support is seen at 114-19, the 20-day EMA.
- Projected rate hikes through year end firmer vs. late Thursday levels (*) : Sep'24 cumulative -38.1bp (-31.5bp), Nov'24 cumulative -76.6bp (-68.6bp), Dec'24 -117.4bp (-107.5bp).
- Slow start to the week ahead with Empire Manufacturing early Monday, Tuesday Retail Sales while focus will turn to Wednesday's FOMC announcement
AUSSIE BONDS: ACGBS Richer, Curve Slightly Steeper, 10yr Tests 3.800%
ACGBs (YM +3.4 & XM +0.9) are richer today, although trade just off session's best level, while headlines have been almost non-existent will majority of Asia out today for public Holidays.
- Global rates look to have just continued with moves made in US tsys on Friday, while the weaker data out of China on Saturday, and talk from PBoC around further stimulus look to have helped local yields.
- Equities have been mixed today, Australia's ASX200 is slightly higher as banks outperformed, while Hong Kong equities were the only outlet traders could sell in response to the poor China data, the HSI was down about 1% at its worst however have recovered majortiy of that weakness to trade just 0.20% lower.
- Cash ACGBs are flat to 2.5bps richer with the 2yr is trading -2.6bps at 3.529%, the 10yr is now -0.2bps at 3.812% both made new cycle lows. The 2s10s is +2.40 at 27.810 while the AU-US 10-year yield differential dropped 2bps this morning to +15bps.
- Swap rates are 1-3bps lower, with the curve is slightly steeper
- The bills strip is cheaper, with pricing -0.5 to +1 across contracts.
- RBA dated OIS is little changed today with 21bps of cuts now priced into year-end. While we have firmed through meeting next year with the Feb meeting is now pricing in 46.5, up 4bps.
- Today, the calendar was empty, focus will now turn to Employment Data on Thursday
BONDS: NZGBs Richer, Curve Steepens, Economists See No GDP Growth
NZGBs are richer today, closing at session's best. Liquidity was very thin today, while headlines were light.
- Economists from the New Zealand Institute of Economic Research have revised their forecasts, now projecting 0.0% annual GDP growth for 2024-25, down from 0.6% in the June survey. For 2025-26, GDP growth is expected to be 2.2%, slightly lower than the previous forecast of 2.4%.
- New Zealand’s Performance of Services Index rose slightly to 45.5 in August from 45.2 in July although this marked the sixth consecutive month of contraction, the longest such period since the global financial crisis. Although still below the 50 threshold indicating growth, the gauge has recovered from a three-year low of 41 in June. All five sub-indexes remain in contraction, with the activity measure rising to 43.9. The composite index, which includes the PMI, increased to 45.6 from 45.0 in July
- The NZGB curve has bull-steepened today, yields closed 1.5-5.5bps lower. The 2yr is -5.2bps at 3.800%, while the 10yr is -3.0bps at 4.051% both at new cycle lows
- Swap rates are flat-5.5bps lower curve is steeper.
- RBNZ dated OIS has firmed slightly today, with 40bps priced in for October, and 88bps of cuts priced in by year-end, pricing has also firmed 2-5bps into May 2025.
- Focus for New Zealand this week will be on GDP due out Thursday.
GOLD: Bullion Reaches New High On Fed Rate Cut Expectations & Weaker US$
Gold prices have continued to rise during APAC trading today as not only is the Fed expected to cut rates for the first time this cycle on Wednesday but there are material expectations that it could be by as much as 50bp. Lower rates are supportive of gold given that it is a non-interest bearing asset. Bullion made a new record today rising to $2589.03/oz.
- It rose 0.8% on Friday to $2577.70 and is 0.3% higher today to $2585.80. The USD index is down 0.2%, pressured by the apparent attempt to assassinate former President Trump, which is also supporting gold prices.
- Bullion has been supported by geopolitical uncertainties over this year. On the weekend, Houthi rebels launched and landed a missile in Israel but without any damage. While Russia is bombarding the strategically important town of Pokrovsk, Ukraine.
- Gold prices have broken above resistance at $2584, 1.764 projection of the Jul 25 – Aug 2 – Aug 5 price swing, opening up $2600, round number resistance. Recent session moves have maintained the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull-mode set up signalling a clear uptrend.
- The USD OIS market has just over 1.5 25bp rate cuts priced in.
- Later the NY Empire manufacturing index for September and euro area July trade data print. The ECB’s Lane and de Guindos make appearances today.
OIL: Crude Little Changed As Weak China Data Offset By Ongoing Libyan Issues
While oil prices rose moderately on Friday, they sold off into the US close. They have remained soft during today’s APAC trading, despite a weaker US dollar (BBDXY index -0.2%). Commodity prices have generally been fallen, while equities are mixed.
- Brent is little changed at $71.58/bbl, close the intraday low, while WTI is 0.1% higher at $68.72/bbl, as supply/demand developments offset each other.
- China’s August data dump, released on Saturday, was generally below expectations. Oil markets have been concerned about the strength of China’s economy for some time and the data added to fears that it won’t make its 2024 growth target. Apparent oil demand fell 5.9% y/y; China is the world’s largest crude importer.
- Some Libyan oil fields have been shut in recent weeks due to a dispute between the country’s two governments over the central bank managing oil revenues. Crude exports fell to 314kbd last week down from 468kbd in the first five days of September, according to Bloomberg tanker tracker data.
- Bloomberg is reporting that hedge funds are net bearish Brent for the first time since data began in 2011.
- Later the NY Empire manufacturing index for September and euro area July trade data print. The ECB’s Lane and de Guindos make appearances today.
LNG: Prices Higher As Global Competition For Supplies Remains Strong
European LNG prices rose 1.6% to EUR 35.75 after rising to EUR 36.19, but they are down over 10% in September to date. Since Russia’s invasion of the Ukraine, the region has become reliant on global supplies and Egypt’s purchase of 20 cargoes for Q4 at a premium to European prices rattled markets on Friday. The heating season begins on October 1 and while European storage is around 93% full, it will face significant competition if winter is particularly cold.
- Russian gas flows to Europe through Ukraine continue as normal. There is material uncertainty when the agreement that allows this expires at year end.
- European industrial demand is likely to remain weak though with manufacturing PMIs below 50 and July euro area IP down 0.3% m/m and 2.2% y/y.
- US natural gas prices fell 2.7% to $2.29 to be up almost 8% this month. Prices were pressured on Friday by the resumption of production following Hurricane Francine. The time of year is also not supportive of gas prices being between heating and cooling seasons. Maxar is forecasting temperatures higher-than-average over the coming 2 weeks. Storage levels remain elevated but are moderating towards the 5-year average.
- Hurricane Francine shut in 52% of natural gas production in the Gulf of Mexico, according to Bloomberg.
- Lower-48 US gas production was down 1% y/y while demand rose 0.1% y/y. Texas’ Freeport LNG facility saw a 1bcf/d increase in gas supplies on Friday from BNEF’s LNG Feedgas Model.
- North Asian prices rose 2.1% but are down 8.3% in September. Demand remains robust with China, South Korea and Bangladesh looking for shipments.
FOREX: Yen Outperforms, USDJPY Lowest Since Mid-2023
The USD index is down 0.2%, pressured by the apparent attempt to assassinate former President Trump, with all of the G10 stronger against the greenback. The yen has outperformed finding support from risk adverse trades but also expectations that the Fed will ease on Wednesday and that the BoJ’s next move will be a hike, even if it isn’t on Friday.
- USDJPY is down 0.5% to 140.18 after a low of 139.96, the first break below 140 since 2023 and strongest since July 2023. It continues to hold below support at 140.25, 28 December 2023 low. Liquidity is thin given the holiday not just in Japan but also South Korea and China.
- AUDUSD is 0.3% higher at 0.6726, close to the intraday high of 0.6730. AUDJPY is down 0.1% to 94.35 and has range traded today.
- NZDUSD is up 0.3% to 0.6174 after a high of 0.6181. Services data and NZIER forecast report showed that the economy remains weak. Further rate cuts are expected. AUDNZD is 0.1% higher at 1.0895 with moves above 1.09 being brief.
- European currencies have outperformed, apart from the yen, with EURUSD up 0.2% to 1.1097. USDSEK is down 0.4% to 10.195 and USDNOK -0.4% to 10.618. USDCHF is down 0.3% to 0.8462 resulting in EURCHF falling 0.1% to 0.9391. GBPUSD up 0.2% to 1.3154. BoE is not expected to cut rates at its Thursday meeting.
- Later the NY Empire manufacturing index for September and euro area July trade data print. The ECB’s Lane and de Guindos make appearances today.
ASIA STOCKS: Asian Equities Mixed With Most Markets Out For Public Holidays
Asian markets are experiencing mixed trading as investors react to disappointing Chinese data, Typhoon Bebinca while liquidity is poor with majority of Asia out on public Holidays. Looking ahead it is busy week for central bank decisions with the Fed the most closely watched followed by BoJ & BoE, while locally we also have Indonesia & Taiwan central bank decisions.
- Hong Kong's HSI has recovered the morning's losses to now trade flat for the session, with the HSTech Index now trading 0.15% higher, while the HS Banks Index is just 0.25% lower, property however is again struggling with the Mainland Property Index down 2.20% the weakness is largely linked to the poor China data from Saturday with Industrial Production fell to 4.5% from 5.1% in July missing expectations of 4.7%, Retail Sales fell to 2.1% from 2.7% prior and missed expectations of 2.5%. Investment also slowed more than expected in August, while the jobless rate reached a six-month high.
- Taiwan's large-cap tech stocks are slightly higher today largely just tracking moves made on Friday in US equities. Germany sent its first warship through the Taiwan Strait in 22 years.
- Australian equities are slightly higher today with Financials contributing most to index gains WBC leads the way higher, up 1.50%. There is little on the calendar until Thursday when employment data is due out.
- US equity futures are little changed this morning with S&P Eminis flat, while Nasdaq 100 is 0.10% lower.
EQUITIES: S&P 500 Nears All Time Highs
- The S&P 500 is nearing all-time-highs again, recovering 8.50% from the recent lows made on August 5th to now trade just 0.75% from the highs made back in Mid-July.
- Key resistance is 5,721.25 (July 16 Highs), while support is 5,537.62 (20-day EMA).
- The Nasdaq 100 hasn't recovered as well and still trades 6.60% from all time highs made in July.
S&P 500 vs Nasdaq 100
ASIA STOCKS: Asian Equity Flows Positive, Indonesian Equities See Strong Demand
- South Korea: Saw $819m of outflows Friday, with the past 5 sessions totaling -$2.17b, while YTD stands at +12.57b. The 5-day average is -434m, below both the 20-day average of -273m and the 100-day average of -12m.
- Taiwan: Saw $163m of inflows Friday, with the past 5 sessions reaching -$1.02b, while YTD is -14.63b. The 5-day average is -204m, below the 20-day average of -327m and the 100-day average of -124m.
- India: Saw inflows of $949m Thursday, with the past 5 sessions now totaling +2.01b, while YTD is +21.23b. The 5-day average is +445m, above the 20-day average of +346m and the 100-day average of +79m.
- Indonesia: Saw inflows of $1.17b Friday, the largest inflow since Apr 26 2022 with the past 5 sessions netting +1.33b, while YTD flows are +3.37b. The 5-day average is +265m, above both the 20-day average of +152m and the 100-day average of +25m.
- Thailand: Saw inflows of $53m Friday, with the past 5 sessions now totaling +281m, while YTD flows are -2.71b. The 5-day average is +56m, above the 20-day average of +30m but below the 100-day average of -9m.
- Malaysia: Saw outflows of $22m Friday, with the past 5 sessions netting +46m, while YTD flows are +911m. The 5-day average is +9m, below the 20-day average of +47m but above the 100-day average of +15m.
- Philippines: Saw inflows of $3m Friday, with the past 5 sessions totaling +47m, while YTD flows are -254m. The 5-day average is +9m, below the 20-day average of +12m and slightly above the 100-day average of -3m.
Table 1: EM Asia Equity Flows
NEW ZEALAND: NZ Economy Very Soft But Should Improve
Q2 GDP prints on Thursday and Bloomberg consensus is forecasting a 0.4% q/q contraction, slightly stronger than the RBNZ’s August projection of -0.5% q/q. While PMI data point to growth remaining soft in Q3 2024. The NZIER published its consensus forecasts today, which have been revised down 0.6pp to zero for the year to Q1 2025 before lower rates drive a recovery.
- Consensus expects growth to improve to 2.2%y/y in Q1 2026 and 2.8% in Q1 2027, both revised down 0.2pp. Private consumption and exports were revised lower for 2025 (see NZIER report here).
- Inflation projections were also revised lower with it now at 2.3% y/y down from 2.6% in Q1 2025 and then staying around 2% thereafter. As a result the OCR rate path has been revised lower to 2027.
- PMI data for August showed both services and manufacturing continuing to contract but at a slightly lesser rate. Both of these indicators are included in the RBNZ’s list of high frequency indicators that it is monitoring and continue to signal that growth is weak. There are likely to be rate cuts at the two remaining meetings in October and November.
- The Business NZ performance of services index rose to 46.8 in August from 43.2, highest since March. The improvement was broad-based with new orders, employment and sales all rising but still below 50.
- Friday’s manufacturing PMI also saw increases across components, including employment and new orders, but they remain below 50.
Business NZ PMIs
Source: MNI - Market News/Refinitiv
MONDAY DATA CALENDAR
| Date | GMT/Local | Impact | Country | Event |
| 16/09/2024 | 0800/1000 | ** |  | Italy Final HICP |
| 16/09/2024 | 0810/1010 |  | ECB's De Guindos at VII Foro Banca event | |
| 16/09/2024 | 0900/1100 | * | | Trade Balance |
| 16/09/2024 | 1200/1400 | | ECB's Lane Speech at European Investment Bank Chief Economists' Meeting | |
| 16/09/2024 | 1230/0830 | ** |  | Monthly Survey of Manufacturing |
| 16/09/2024 | 1230/0830 | ** |  | Empire State Manufacturing Survey |
| 16/09/2024 | 1300/0900 | * | | CREA Existing Home Sales |
| 16/09/2024 | 1530/1130 | * | | US Treasury Auction Result for 13 Week Bill |
| 16/09/2024 | 1530/1130 | * | | US Treasury Auction Result for 26 Week Bill |
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