JGBS AUCTION: 20Y Supply Faces A Cyclical High Yield & A Steeper Curve

Last Friday's CFTC positioning update showed leveraged funds cut back on USD longs. The table below presents the weekly change as at 4 of Feb (last Tuesday), along with outright positions by currency and investor type. 

• Leveraged contracts also rose for the currencies covered except for CAD. Such shifts are arguably not that surprising as broader USD sentiment faltered through Monday/Tuesday last week amid a tariff delay from Trump on Mexico and Canada.
• Broader USD sentiment mostly tracked sideways to slightly higher as the week unfolded, although the BBDXY index remained well off earlier highs from Monday Feb 3.  
• Outright positions from leveraged funds remain skewed in favor of the USD, with net outright shorts against all currencies except for GBP.
• The asset manager space, saw more mixed trends, with yen flipping back to a net long, with decent short covering last week. EUR longs were cut back, while AUD and CAD shorts were added.
• Yen momentum was mostly positive last week amid better data outcomes and hawkish BoJ rhetoric. 

Table 1: CFTC Positioning By Currency & Investor Type

Source: CFTC/MNI - Market News/Bloomberg 

In a data light week, the focus will likely be on local survey data, outside of international developments.

• On Tuesday, Westpac consumer confidence for February prints. In January it fell 0.7% m/m to 92.1 but it may rise in February as there have been increased expectations voiced in the mainstream media of a rate cut at the RBA’s February meeting.
• The NAB business survey for January is also out on Tuesday. Confidence has been oscillating around the zero mark over the last 12 months. Conditions on the other hand have been trending lower since Q4 2023 and printed at +6 in December. Cost and price components will be monitored with purchase costs trending higher since October.
• Wednesday sees the new ABS quarterly lending data for Q4. The monthly series were discontinued after the September figures were released.
• Melbourne Institute consumer inflation expectations for February are published on Thursday. In January they eased 0.2pp to 4.0%. The lower-than-expected Q4 core CPI data may pressure it lower but petrol prices are higher in February compared with end-January.
• There are no RBA events this week ahead of the February 18 decision.

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