AUSTRALIA DATA: NAB Business Survey Price Measures Ease Further
NAB business confidence and conditions improved in September. Confidence was -1.9 up from -4.5, but it has been close to zero for around two years. Conditions have been slowing for around the same time but may have stabilised. They rose over 3 points to 6.9 in September, in line with the historical average. The good news was that price and cost components all eased.
- The improvement in business conditions was driven by trading, profitability and employment, which appears to have also stabilised above zero.
- The outlook remains soft with orders low at only -4.7 but Q3 improved to -4.6 from -7.1 in Q2. Inventories rose in September though which may reduce future purchasing. Exports also deteriorated last month.
Australia NAB business conditions vs orders
- Only labour costs remained above the series average in September rising 1.7% 3m/3m but down from 1.8%, while the other inflation measures are now in line or below. Purchase costs rose 1.2% down 0.4pp and the lowest increase since February 2021.
- Lower cost pressures are helping to bring price increases down but softer demand also seems to be helping, as NAB price measures rose less than costs. Final product prices rose 0.5% down from 0.7%, also the lowest since February 2021, while retail prices were up 0.5% after 1.2% in August, to be the slowest rate since the Covid-impacted October 2020.
Australia NAB price/cost components
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS: Short End Leads Post-NFP Rally Despite Faded 50bp Sept Cut Prospects
The short-end led a Treasury rally in a busy Friday session, despite a fading of the initial dovish reaction to soft nonfarm payrolls data.
- The week's main event August employment report showed both a miss in nonfarm payrolls growth (142k vs 165k cons) and heavy downward revisions to the prior 2 months (-86k), alongside a slight downtick in the unemployment rate.
- That spurred a sharp bull steepening in the curve as a 50bp September Fed cut regained 50% implied probability.
- Comments 15 minutes after the NFP release by NY Fed Pres Williams were seen as noncommittal on 25 vs 50bp, and yields reversed steadily from session lows to session highs.
- Gov Waller's speech at 1100ET saw a renewed Treasury bid, as headlines emerged that he could support a "front-loaded" cutting cycle - but it soon became clear that this was a hypothetical and, like Williams, didn't seem particularly pro-50bp for Sept.
- The net impact was that September pricing was trimmed to 32bp of cuts, (4-5bps fewer than seen pre-payrolls), but short-end Treasuries still ended much stronger as futures saw more cuts overall: 2.5bp extra by end-2024 (to 113bp cumulative) and 12bp of extra cuts due by Jun’25 (221bp).
- 2s10s closed the week comfortably in positive territory for the first time since 2022, rallying 7bp on the day.
- We won’t get any more Fed communications due to the pre-FOMC blackout – but for observers clinging on to the possibility of a 50bp September hike, next Wednesday’s CPI release could be eyed as a tiebreaker.
- Latest levels: The Dec 24 T-Note future is up 6.5/32 at 114-30.5, having traded in a range of 114-10 to 115-13. The 2-Yr yield is down 8.7bps at 3.6565%, 5-Yr is down 4.3bps at 3.4938%, 10-Yr is down 1.5bps at 3.7117%, and 30-Yr is unchanged at 4.0198%.
USDCAD TECHS: Bear Trend Intact
- RES 4: 1.3646 High Aug 15
- RES 3: 1.3641 50-day EMA
- RES 2: 1.3574 20-day EMA
- RES 1: 1.3565 High Sep 03
- PRICE: 1.3530 @ 16:02 BST Sep 06
- SUP 1: 1.3441 Low Aug 28 and the bear trigger
- SUP 2: 1.3420 Low Mar 08
- SUP 3: 1.3358 76.4% retracement of the Dec 27 - Aug 5 bull leg
- SUP 4: 1.3288 Low Jan 05
Recent gains in USDCAD appear to have been a correction and the recent impulsive sell-off, in August, reinforces a bearish condition. Note too that moving average studies are in a bear-mode set-up, highlighting a dominant downtrend. A resumption of bearish activity would signal scope for a move towards 1.3358, a Fibonacci retracement. On the upside, initial firm resistance to watch is at 1.3574 the 20-day EMA.
OPTIONS: Friday SOFR Option Flow Roundup
Friday's SOFR options flow included:
- SFRU4 95.12/95.06ps traded 3.5 in 3.5k.
- SFRU4 95.06/95.18cs 2x3, traded 5.25 and 5.5 in 2.5k.
- SFRU4 95.12/95.25cs traded 4.5 and 4.75 in 6.5k.
- SFRU4 95.25/95.37cs 1x2 traded 1.5 in 5k.
- SFRU4 95.25/95.31cs, bought for 1 I 12k total
- SFRU4 95.2595.31/95.37/95.43c condor, traded 1.25 in 6.5k.
- SFRU4 95.50c traded half in 10k.
- SFRU4 95.12c sold at 4.75 in 12k total.
- SFRU4 95.25c sold at 1.25 in 10k
- SFRU4 95.12 call vs 9512.25 sold at 4.75 in 15k all day
- SFRU4 95.00/95.12/95.25 cfly sold at 4 in 2.5k
- SFRU4 94.93/95.50 traded 0.25 for the c in 6k. (risk reversal)
- SFRU4 95.18/95.12/95.06p ladder traded 0.75 in 2.5k. (block)
- SFRU4 95.18/95.31cs traded 3.25 and 3.5 in 10k. (block)
- SFRV4 95.50p, traded 1.25 in 8.5k.
- SFRZ4 95.50p, traded 4.5 in 7.5k.
- SFRZ4 95.87/96.12/96.87c ladder vs 95.25p traded 2.25 and 2.5 in 5k.
- SFRZ4 96.12/96.25cs 2x3 traded 10 in 5k. (block)
- SFRH5 96.31/96.00ps 2x3 traded 12.5 in 5k.
- SFRM5/0QM5 97.50c, spread, traded for -6 in 5k.
