CHINA: Country Wrap: Property Slump May Extend Into 2025.
Nov-28 04:57
- Chinese Corporates Foreign Company Debt the lowest in a Decade (source: MNI – Market News).
- Central Bank Withdraws Liquidity for Second Day (source: MNI – Market News).
- China’s Property Slump May Extend Into 2025. (source: Fitch Ratings)
- Equity markets under pressure again today with CSI 300 -0.79%, Hang Seng -1.32%, Shanghai -0.30%, Shenzhen -0.19%.
- CNY: Yuan Reference Rate at 7.1894 Per USD; Estimate 7.2501
- Bonds: China 10-year Government bond 2.05%.
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FOREX: A$, NZD Weighed By Weaker Yuan, Yen Firms Modestly
Oct-29 04:37
AUD and NZD have underperformed, particularly against the yen, as the Tuesday Asia Pac session has unfolded. The break higher in USD/CNH above 7.1500 to fresh multi month highs, has weighed on the antipodeans.
- The USD BBDXY index is little changed, last near 1262.50. US equity futures are down a touch, while regional equity markets are mixed. US yields sit down a down, helping yen at the margins.
- The softness in China and Hong Kong equities has also likely weighed on the AUD.
- AUD/USD last sits at 0.6565/70 (off 0.25%), fresh multi month lows back to the first half of August. NZD/USD is near 0.5970, down 0.20%. Earlier data showed softer jobs filled for September.
- Commodity prices in the metals space are also down, copper off 0.6%, iron ore back to $102.45/ton/
- USD/JPY is back under 153.00, around 0.20% stronger in yen terms. Still, we remain comfortably within Monday's ranges. Better jobless data and further FX jawboning may have helped at the margin, but follow through has been limited.
- There were reports PM Ishiba is seeking a partial coalition with centrist party DPP (per Yomiuri), but a press conference with the DPP leader played down such prospects.
- Later US September trade, inventories, JOLT job openings, October consumer & Dallas Fed services confidence and August house prices print, as well as November German consumer confidence and UK September credit data. BoC’s Macklem and Rogers speak.
BONDS: NZ-US 10Y Differential Close To YTD Low
Oct-29 04:28
NZGBs closed mid-range, with benchmark yields 2-3bps higher. Yields were 5bps higher early in the session as the local market played catch-up to the sell-off in US tsys after yesterday’s Labour Day holiday.
- Notably, the NZGB 10-year has outperformed its US counterpart, with the NZ–US yield spread narrowing by 6bps since Friday’s close to reach +17bps. This places the differential just above July's low of +13bps, the narrowest level since mid-2021.
Figure 1: NZ-US 10-Year Yield Differential
Source: MNI – Market News / Bloomberg
US TSYS: Tsys Futures Edges Slightly higher, Ranges Narrow, Volumes Low
Oct-29 04:25
- Tsys futures have edged slightly higher throughout the session, ranges have been narrow, while volumes are well down on Monday's. It has been a very quiet session for headlines or economic data. Asian equities have seen some weakness over the past hour, however nothing major to note. TU is +00⅜ at 103-01⅞, while TY is +02 at 110-24+, key support is seen at 110-13 (61.8% retracement of the Apr - Sep bull cycle (cont))
- Cash tsys are little changed today, the 2yr is -1.2bps at 4.126%, while the 10yr is also -1.2bps at 4.270% while the 3-7yr tenors are unchanged for the session.
- Fed fund futures have remained steady over the past week, there is 24.1bps priced at the November meeting and 43.1bps priced by year-end.
- Betting markets continue to swing further in Trumps favor, with Polymarket now showing a 66.3 vs 33.7, Kalshi show 62 vs 38 both at or near widest levels, while RealClear Politics Poll average shows Trump with a slight lead of 48.6 vs 48.4 and although close, this is the highest Trump has been since June.
- Later today, Wholesale Inventories & Conf. Board Consumer Confidence is due out
