OIL: Crude Holds Onto Recent Gains, IEA Monthly Report Out Later

ACGBs (YM +1.0 & XM +1.0) are slightly stronger after today’s confidence data drop.

• Westpac’s measure of consumer confidence was little changed in February rising 0.1% m/m to 92.2 as the positive effect of increased talk of a February rate cut following the Q4 CPI data was offset by global uncertainty and continued cost-of-living pressures.
• NAB January business confidence picked up to +4 from -2, its highest in three months. The series has been oscillating around the zero mark for around two years. Conditions moderated further to +3 from +6, in line with the November outcome.
• “US President Donald Trump has declared he would give "great consideration" to a tariff exemption for Australia.” (per ABC)
• Cash ACGBs are 1-2bps richer.
• There has been no cash trading for US tsys in Asia-Pac session today with Japan out for the Foundation Day Holiday. TYH5 is little changed.
• The focus turns to Fed Chairman Powell's testimony to the Senate Banking Committee today.
• Swap rates are 1bp lower.
• The bills strip is flat to +1 across contracts.
• Tomorrow, the local calendar will see Home Loans data.
• This week, the AOFM plans to sell A$400mn of the 2.75% 21 May 2041 bond tomorrow and A$700mn of the 1.50% 21 June 2031 bond on Friday. 

• News on potential tariffs on steel and aluminum by the US continues to reverberate through financial markets, shaking investor confidence.
• Gold safe haven status has seen another day of gains and its rise swift early in the day reaching a new high of $2,942.68, before giving back some of those gains to be at $2,919.75  – comfortably higher than the opening price of $2,908.26.
• Gold’s ‘safe-haven’ status ensures that in periods where the unpredictability of President Trump’s comments or threats on tariffs spooks markets, gold climbs.
• Evolving news out of China could have material impact for gold as a pilot program for insurance funds is being launched that allows diversification of their asset allocation into gold; with estimates ranging of US$25 to $30 billion could be allocated to the scheme.
• Gold’s appeal is having far reaching impacts globally with South African listed goldminers jumping 2.3% on Monday, following Trump headlines on tariffs.
• Given Gold is impacted by interest rate movements, the day ahead sees the Federal Reserve Chairman Jerome Powell’s semi-annual testimony to lawmakers where market observers will pore over every word for hints as to the direction of interest rates. 

NZGBs closed slightly mixed in the middle of the session’s ranges on a data-light day. 

• NZGBs did, however, manage to slightly outperform ACGBs, with the NZ-AU yield differential 1bp tighter on the day.
• There has been no cash trading for US tsys in Asia-Pac session today with Japan out for the Foundation Day Holiday. TYH5 is little changed.
• Swap rates closed 1-3bps lower, with the 2s10s curve flatter.
• RBNZ dated OIS pricing closed little changed. 49bps of easing is priced for February, with a cumulative 121bps by November 2025.
• “NZ’s residential construction market may start to recover in 2H of 2025, the Treasury says in Fortnightly Economic Update. ANZ business survey shows residential building intentions are highest since 2021.” (per BBG)
• Today, the local calendar was empty. Tomorrow Treasury Chief Economic Adviser Dominick Stephens will deliver a presentation titled ‘The State of the Economy’. The next data release is Card Spending on Thursday.
• NZ Debt Management has issued NZ$5.5bn of May 2035 bonds via a syndicated tap. The bonds, which carry a coupon of 4.50%, were issued at a spread of 11bps over the 15 May 2034 nominal bond, at a yield to maturity of 4.65%. Total book size, at final price guidance, exceeded NZ$21.5bn.