AUSSIE BONDS: ACGB Sep-30 Linker Auction Result

Westpac: "The consumer mood has soured for two months in a row and remains on the pessimistic side. The survey results were also weaker later in the survey period than in the first two days. However, sentiment is still less negative than a year ago and some components suggest that consumers expect things to continue to improve from here. 

Consumers’ assessment of their finances compared with a year ago reversed the gains in December, falling 7.8% in the month to 77.7. The declines were particularly marked for outright homeowners. Renters also recorded a small decrease in the month in this component, while homeowners with a mortgage saw a 15% increase, which took this component back to 2022 levels for this group. Mortgagors are less likely to be retired than the other two groups and thus more likely to have benefited from last year’s tax cuts. 

Forward-looking measures were more stable, as was consumers’ assessment of whether now is a good ‘time to buy a major household item’. Expectations about family finances over the next 12 months reversed last month’s decline, while confidence around the outlook for the economy in the coming year was unchanged following the fall in December. Views about the economy in five years’ time improved a little – up 0.7% in January – but at 96.6, this component remains below November’s level." 

The risk mood is supportive in early Tuesday dealings, albeit away from best levels for some markets. The catalyst is an earlier BBG story that hit near the NY/Asia cross over around a potential for a gradual tariff hike plan being considered/studied by Trump's economic advisors (see this link). The plan has reportedly not been presented to incoming President Trump yet, but it is showing the sensitivity of markets to tariff related headlines. 

• US equity futures have opened up firmer, after a mixed cash session in Monday US trade. Eminis are around 0.30/35% higher, while Nasdaq futures are up by over 0.50%.
• In the FX space, the USD BBDXY index opened up 0.40% weaker, but the index is up from lows, last near 1315.3. This puts us back close to pre US NFP levels from last Friday. Gains are fairly uniform against the USD, although higher beta plays are outperforming at the margin. NZD/USD is up 0.40% to 0.5605/10, while AUD/USD is up 0.30%, last near 0.6195. GBP and EUR are up 0.20-0.25%, while yen has gained less than 0.10%.
• USD/CNH is back under 7.3400, up around 0.10% in CNH terms. MXN is 0.20% firmer, with USD/MXN, back near 20.61, with both pairs up from earlier lows.  
• US Tsys futures have opened firmer, with long-end contracts outperforming, the 10yr contract is +07 at 107-14+. Cash trading will return shortly, after being closed in Asia on Monday, the 10yr briefly topped 4.80% overnight following a fresh wave of selling in SOFR futures, the 10yr is on track to open around 4.75%.
• Oil is close to unchanged for WTI, while Gold is up a touch, last near $2669. 

In post-Tokyo trade on Friday, JGB futures were sharply weaker following US payrolls, -50 compared to settlement levels. The local market was closed yesterday for a holiday.

• Overnight, it was another weak session for US tsys, albeit less so than Friday. US yields finished flat to 3bps higher across benchmarks. Volumes were decent (TYH5 over 1.5M contracts despite Japan being out on extended holiday) ahead of this week's PPI and CPI inflation data on Tuesday and Wednesday respectively.
• NY Fed consumer inflation expectations saw a mixed month for December, with the 1Y holding steady at 3.0%, the 3Y jumping 40bps to 3.0% and the 5Y falling 20bps to 2.7%. The 3Y measure is its highest since Nov 2023 and came amidst its highest uncertainty since May.
• Wednesday’s US CPI report headlines the weekly calendar, with Bloomberg Consensus currently looking for a 0.2% M/M print for core CPI in what’s a close call with a 0.3% M/M. Indeed, our initial review of 13 unrounded analyst estimates sees these generally more detailed projections centred around 0.25% M/M for core CPI in December.
• Today, the local calendar will see Current Account Balance, Trade Balance, and Bank Lending alongside 5-year supply. BOJ Deputy Governor Himino will also give a speech in Kanagawa at 1030 JT.