LNG: China Tariffs On US LNG Eased Supply Concerns In Europe

TYH5 is 108-12+, -0-07 from NY closing levels. 

• Cash bonds are 2-3bps cheaper, with a slight steepening bias, in today’s Asia-Pac session after Friday’s heavy close.
• Tsy futures finished last week near session lows following the December manufacturing ISM survey, which beat expectations. The headline reading of 49.3 improved from 48.4 prior and a 9-month high, besting the survey expectation of 48.4.
• This week, US economic data and Treasury supply are being brought forward to accommodate Thursday's "day of mourning" to honour President Carter. The Federal holiday sees most markets closed; the exception so far is CME rates, which will operate on a shortened session.
• Thursday's weekly jobless and continuing claims will be released on Wednesday according to the Dept of Labor site.

In Tokyo morning trade, JGB futures are substantially weaker, -26 compared to settlement levels on 30 December, the last day of trade. 

• The local data calendar just has Dec PMI revisions on tap today. On Thursday, November labour cash earnings data is released, which will be of greater focus.
• Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after Friday’s heavy close.
• Cash JGBs are 1-2bps cheaper across benchmarks beyond the 1-year (+3.7bps). The benchmark 10-year yield is 2.1bps higher at 1.121% versus the cycle high of 1.134% set on 30 December 2024.
• Swap rates are 1-6bps higher, with the 20-30-year zone leading. Swap spreads are mostly wider.

The final December S&P Global composite PMI was revised up 0.3pp to 50.2, the third straight month at this level and signalling only slight growth in activity which is being driven by the services sector. The services PMI was revised up 0.4pp to 50.8 to be 0.3pp higher than November but the Q4 average eased to 50.8 from 51.1. Growth has been stuck at a lacklustre 0.2% q/q for the last three quarters, and the services PMI is suggesting that it is likely to remain weak or possibly moderate further.

• The S&P Global services report was mixed with higher inflation and lower employment but higher demand and confidence at its highest for more than two and a half years. The improvement in sentiment was due to expected rate cuts and “greater opportunities following the Australian elections”.
• The pickup in the December services PMI was driven by increased new business as “client interest” developed. Export orders grew for the first time in four months driven by the US and Asia.
• Cost pressures rose for the third straight month, but remain slightly below average, due to increased material, transport and wage costs. Selling price inflation picked up too but is also below average.
• There was marginal “job shedding” in December, the first since Covid-impacted August 2021. The shift was driven by less capacity pressures as outstanding work continued to be reduced but also difficulties finding skilled labour to replace voluntary leavers.
• See S&P Global report here.

Australia S&P Global services PMI vs GDP q/q%