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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.
- The greenback has extended losses in Asia, another stronger than forecast Yuan fixing and firmer regional equities weighed today. BBDXY has printed a fresh 3 month low, the index is down ~0.3% today. Yen is the strongest performer in the G-10 space as risk-on flows provide a level of support. The low from Oct 3 and key support at ¥147.43 is being tested. A break through here allows bears to target ¥145.91, trendline support drawn from Mar 24 low.
- The FI space was mostly muted with little follow through on moves. JGB futures are sharply higher and just off Tokyo session highs, +47 compared to settlement levels, after today’s 20-year supply saw solid demand metrics. The low-price beat dealer expectations and the cover ratio increased. The tail also declined materially.
MARKETS
US TSYS: TY Breaches Monday's High
TYZ3 deals at 108-31, +0-04, a 0-05 range has been observed on volume of ~70k.
- Cash tsys sit 1-3bps richer across the major benchmarks, light bull flattening is apparent.
- Tsys have ticked higher through the Asian session as risk sentiment improves in Asia, the greenback is pressured and the Hang Seng is firmer.
- Gains have been marginally pared as news has crossed of an agreement between Hamas and Israel for the release of women and children hostages (RTRS), the story is developing and we are awaiting more details.
- TY sits above Monday's high, Technically the trend condition is bullish, resistance comes in at 109-08+ Nov 17 high then 109-20 Sep 20 high. Support is at the 50-Day EMA (108-03).
- The docket in Europe is thin today, further out FOMC minutes from the Nov 1 policy meeting cross, as does Existing Home Sales.
JGBs: Bull Flattening After Solid 20Y Auction
JGB futures are sharply higher and just off Tokyo session highs, +47 compared to settlement levels, after today’s 20-year supply saw solid demand metrics. The low-price beat dealer expectations and the cover ratio increased. The tail also declined materially.
- With the domestic data calendar empty today, today’s supply was the key domestic driver. That said, the local bid was also supported by an extension of yesterday’s rally in longer-dated US tsys in today’s Asia-Pac session. Cash US tsys are flat to 4bps richer, with the curve flatter.
- The cash JGB curve twist-flattens, with yields 0.5bp higher to 6.6bps lower. The benchmark 10-year yield is 5.1bps lower at 0.700% versus the cycle high of 0.97% set in late October.
- The 20-year yield is 6.0bps lower at 1.409%, outperforming on the curve in post-auction dealings. As highlighted in the auction preview, improved sentiment towards longer-dated bonds globally in November, especially following positive inflation data, had the potential to offset the fact that the outright yield on offer today was approximately 10bps lower than the level seen at October auction and around 30bps lower than the cycle high set late in October.
- The swaps curve has bull-flattened, with swap spreads mixed.
- Tomorrow, the local calendar is empty, apart from BOJ Rinban operations covering 1-10-year and 25-year+ JGBs.
ACGBs: Richer & At Best Levels, US Tsys & JGBs Provided Spillover Benefits
ACGBs (YM +3.0 & XM +6.5) are at Sydney session highs despite the November RBA Minutes seemingly leaving the door ajar for another rate hike. The Minutes stated that the forecasts for inflation assumed another 1-2 more rate rises and the risks around inflation not returning to target by 2025 had risen.
- Earlier at the ASIC Annual Forum, RBA Governor Bullock stated that the biggest challenge facing the economy is inflation. She also pointed out that the current inflation problem is not just due to the supply side but that there are also underlying demand pressures, which the central bank is trying to contain.
- Today’s ACGB rally has been aided by an extension of yesterday’s rally in longer-dated US tsys in today's Asia-Pac session.
- Richer longer-dated JGBs following a solid 20-year JGB auction also provided spillover benefits.
- Cash ACGBs are 4-7bps richer, with the AU-US 10-year yield differential at +5bps.
- Swap rates are 5-7bps lower, with the 3s10s curve flatter.
- The bills strip has twist-flattened, with pricing -1 to +4.
- RBA-dated OIS pricing is flat to 3bps softer across meetings.
- Tomorrow, the local calendar sees the Westpac Leading Index, along with a speech by Governor Bullock at the ABE dinner.
- Tomorrow, the AOFM plans to sell A$800mn of the Dec-34 bond.
NZGBS: Closed With A Twist Flattening In Line With $-Bloc Developments
NZGBs closed with a twist-flattening of the 2/10 curve, witnessed by yields 1bp higher to 1bp lower. The local market's movement today aligns with trends in the $-bloc, influenced by the more favourable-than-expected demand observed in yesterday's 20-year US tsy auction.
- The US tsy curve finished Monday’s NY session with a twist-flattening of the curve, pivoting at the 5s. US yields were 3bps higher to 2bps lower. Notably, the rally in longer-dated US tsys has persisted into today's Asia-Pac session, where cash US tsys are flat to 3bpps richer, contributing to a flatter curve.
- NZGBs have underperformed their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials 3bps wider on the day.
- The 2s10s swaps curve has also twist-flattened, with yields 2bps higher to 2bps lower.
- RBNZ dated OIS pricing closed with pricing flat out to the Apr’24 meeting and 1-3bps firmer beyond. Terminal OCR expectations remained at 5.54%.
- 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.
- The local calendar’s next release is Q3 Retail Sales Ex-Inflation on Friday.
GOLD: Buoyed By A Softer USD & Lower Longer-Dated US Tsy Yields
Gold is 0.8% higher in the Asia-Pac session, after closing 0.1% lower at $1978.07 on Monday.
- Bullion has been supported by a lower USD index and a US Treasury curve that finished Monday's NY session with a twist-flattening of the curve, pivoting at the 5s. US yields finished 3bps higher to 2bps lower. The 20-year finished 2.2bps richer after supply saw better than expected demand metrics.
- Today’s strength in the yellow metal has also been boosted an extension of yesterday’s rally in longer-dated US Treasuries during today’s Asia-Pac session. Cash US tsys are flat to 3bps richer, with the curve flatter.
- After last week’s strong gains, there is some way until support at $1943.1 (50-day EMA) whilst resistance is seen at $2009.4. (Nov 7 high), according to MNI’s technicals team.
OIL: Crude Down Marginally, Key Inventory Data Later
Oil prices have held onto most of their recent gains but are down moderately during APAC trading after two days of strong rises. Brent is down 0.4% to $81.96/bbl, close to the intraday low, and WTI is also 0.4% lower at $77.51/bbl. The USD index is down a further 0.3% but is failing to provide support to crude.
- Prices have been supported in recent sessions on expectations that Saudi Arabia and Russia will extend their voluntary cuts into 2024 and speculation that the rest of OPEC may reduce output further when the group meets this weekend given the latest price weakness. RBC said today that it sees “some scope for more OPEC cuts, according to Bloomberg.
- The return to fundamentals has made US inventory data important again and today US API data are released.
- Later the FOMC November meeting minutes are published. There are also Chicago and Philly Fed indices, October US existing home sales and Canadian CPIs. The ECB President Lagarde and Board member Schnabel speak.
EQUITIES: Markets Rally On US And China Optimism
Equity markets were generally stronger in Asia today, with the MSCI APEX 50 +1.3%, supported by China’s state-owned media calling for funding for the property sector and following Monday’s rise on Wall Street. There is optimism that the Fed won’t need to tighten further and that the US economy will manage a soft landing. In response US yields are lower and the USD has softened (USD index -0.3%). S&P futures are flat while the NASDAQ is 0.1% higher during APAC trading.
- China’s CSI 300 is up 0.7% at the time of writing, while its property index is 3.6% higher as speculation of stimulus grows. The Hang Seng is a percent higher.
- Japan’s Nikkei has overturned earlier losses to be flat on the day. The Topix is down 0.2%. Korea’s KOSPI is 0.9% higher. Taiwan’s TAIEX is +1.1%.
- Australia’s ASX is up 0.3% driven by the mining sector as iron ore prices continued to move higher, buoyed by the China reports, but the NZ’s NZX 50 is down 0.4%.
- ASEAN is mixed with Indonesia’s Jakarta Comp falling 0.6% but the SE Thai up 0.5%. The Malay KLCI is up 0.2% but Singapore’s Straits Times is down 0.3%.
- India’s Nifty 50 has rallied 0.4%.
FOREX: Greenback Extends Losses
The greenback has extended losses in Asia, another stronger than forecast Yuan fixing and firmer regional equities weighed today. BBDXY has printed a fresh 3 month low, the index is down ~0.3% today. US Tsy Yields have also ticked lower.
- Yen is the strongest performer in the G-10 space as risk-on flows provide a level of support. The low from Oct 3 and key support at ¥147.43 has been breached. Bears now target ¥145.91, trendline support drawn from Mar 24 low.
- The Kiwi is up ~0.5%, NZD/USD is testing the 200-Day EMA ($0.6063) and the pair sits at its highest level since early August.
- AUD/USD is ~0.4% higher, the pair last prints at $0.6580/85. Technically resistance comes in at $0.6382, 50.0% retracement of Jul-Oct bear leg. Support is at $0.6453, Nov 17 low.
- Elsewhere in G-10 EUR and GBP are both up ~0.2% reflecting the broader USD move.
- The docket is thin in Europe, further out we have Canadian CPI and the FOMC minutes of the November meeting.
SOUTH KOREA: Nov Export Growth Slows In First 20-days, But Detail Looks Solid
South Korea's first 20-days of trade data for November has printed. Exports were +2.2% y/y, a down step from the pace of recent months (+9.7%y/y in September and +4.6%y/y in October). In daily average terms exports were +2.2% y/y, also down from the October pace of 8.6% y/y. This suggests some slowing in total month y/y export growth, see the chart below.
- Looking at the detail, chip exports were +2.4% y/y (we were -6.4% last month for the first 20-days), so well above the trough point from earlier in 2023. By county, exports to the US remained resilient at +15.7% y/y. China remained a drag but at -2.4%, we were also above earlier trough points.
- Imports were -6.2%y/y, versus close to flat in the first 20-days of Oct. The trade deficit was -$1.42bn, also an improvement on the prior period (-$3.75bn).
ISRAEL: Reports Emerging Of An Approaching Israel-Hamas Temporary Truce
News services are reporting that a deal on the release of Israeli hostages is close with some revealing some of the details it may contain. The reports have pressured oil prices with Brent down 0.5% to $81.94/bbl.
- According to Reuters, a Hamas official has spoken to Al Jazeera that Qatar will announce the details of the truce but that it will include a ceasefire of several days, aid allowed into Gaza and the hostages - Palestinian prisoner exchange.
- According to Al Jazeera (commentary can be followed here), the Israeli media are reporting that Israel has given the “green light” for the agreement, but it is yet to be confirmed by the government.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Flag | Country | Event |
| 21/11/2023 | 0700/0700 | *** |  | UK | Public Sector Finances |
| 21/11/2023 | 0745/0845 | * |  | FR | Retail Sales |
| 21/11/2023 | 1000/1000 | * | | UK | Index Linked Gilt Outright Auction Result |
| 21/11/2023 | 1015/1015 | | UK | Treasury Select Hearing on MPR | |
| 21/11/2023 | 1330/0830 | *** |  | CA | CPI |
| 21/11/2023 | 1330/0830 | ** |  | US | Philadelphia Fed Nonmanufacturing Index |
| 21/11/2023 | 1355/0855 | ** | | US | Redbook Retail Sales Index |
| 21/11/2023 | 1500/1000 | *** | | US | NAR existing home sales |
| 21/11/2023 | 1600/1700 |  | EU | ECB's Lagarde discusses Inflation and democracy | |
| 21/11/2023 | 1630/1130 | * | | US | US Treasury Auction Result for Cash Management Bill |
| 21/11/2023 | 1630/1130 | ** | | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 21/11/2023 | 1715/1815 | | EU | ECB's Schnabel at Wurzburg Policy Lecture | |
| 21/11/2023 | 1800/1300 | ** | | US | US Treasury Auction Result for TIPS 10 Year Note |
| 21/11/2023 | 2100/1600 | | CA | Canada fall economic/fiscal statement (release time is approximate) |
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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