LNG: European Gas Down On Technical Selling But Refilling Worries Dominate

• Treasuries ended Friday with steep bear-flattening move as Fed-dated OIS contracts repriced to levels anticipating just one 25bp cut this year. While the selloff was sparked by strong December employment, the 2 to 7yr yields all rising over 10bps, with the 3yr the worst performing closing the session 13bps higher. Tsys futures were hit hard with TU closing -08⅝ at 102-16⅜, while TY closed -0-26+ at 107-12+ well through support and has confirmed a resumption of the downtrend.
• There will be no cash trading in Asia today, with Japan out for a Public holiday. On Friday, cash yields closed 1-13bps higher. the 2yr closed +11.6bps at 4.379%, while the 10yr closed at +7bps at 4.675% now the highest level since Nov 2022. The 2s10s closed back below 40bps, falling 4.7bps at 37.582, while the 5s30s & 2s30s both fell about 10bps.
• The 256k in December leaves a strong recent trend, with 255k in Sep, an average of 128k for those two months (initially 132k) before surprisingly reaccelerating again. Unemployment rate: 4.086% in Dec after very small downward revisions in the prior two months, with 4.23% in Nov (initially 4.246%) and 4.14% in Oct (initially 4.15%).
• Several big banks shifted their Fed forecasts to fewer or later-starting cuts, with Bank of America saying they no longer expect any.
• Projected rate cuts through mid-2025 have retreated since this morning's data, current vs. morning levels* as follows: Jan'25 at -0.7bp (-1.7bp), Mar'25 -6.3bp (-10.1bp), May'25 -10.5bp (-15.9bp), Jun'25 -18.2bp (-25.6bp), Jul'25 -20.2bp (25.5bp).
• The calendar is light on today, with just NY Fed 1-Yr Inflation Expectations & Federal Budget Balance, focus will turn to PPI & CPI later in the week.

ACGBs (YM -9.0 & XM -5.0) are weaker with the 3/10 curve flatter after US tsy yields finished Friday’s session sharply higher following larger-than-expected December non-farm and private payroll gains and a dip in the unemployment rate. The US 2-year yield rose 12bps to 4.38%, while the 10-year rose 7bps to 4.76%, the highest since November 2023.

• This week, CPI and PPI inflation measures are on Wednesday and Thursday respectively.
• Cash ACGBs are 5-9bps cheaper, led by the short-end, with the AU-US 10-year yield differential at -17bps.
• Swap rates are 3-7bps higher, with the 3s10s curve flatter.
• The bills strip has bear-steepened, with pricing -3 to -9.
• RBA-dated OIS pricing is 2-10bps firmer across meetings today. A 25bp rate cut is more than fully priced for April (109%), with the probability of a February cut at 69% (based on an effective cash rate of 4.34%).
• Today, the local calendar will see Melbourne Institute Inflation and ANZ-Indeed Job Advertisements data.
• AOFM Bond issuance will resume this week, with A$800mn of the 3.50% 21 December 2034 bond to be sold on Wednesday and A$700mn of the 2.75% 21 November 2027 bond to be sold on Friday. 

• AUD/NZD fell 0.04% on Thursday to 1.1060 and remains trading within the past 3 month range of 1.1000-1.1100, while the AU-NZ 2yr swap remains trading near its highest levels for the past year.
• The USD traded higher on Friday, rising for a fourth day, reaching its highest level since Nov. 2022 after the December US jobs report exceeded estimates by a wide margin. The NZD and AUD were the worst performing G10 currencies on Friday.
• Initial resistance is 1.1100 (round number), with a break here opening a move to 1.1150 (July Highs), to the down side a break below 1.1055 (20-day EMA), would open a move to retest 1.1000 which has acted a key support for the past 3 months.
• RBNZ dated OIS currently pricing in 49bps of cuts at the Feb meeting, while RBA Dated OIS is pricing in a 71% chance of a 25bps cut in Feb.
• Melbourne Institute Inflation & ANZ-Indeed Job Advertisements are out a bit later this morning.