JGBS: Futures Are Weaker, BoJ Speaks At IMF Event

ACGBs (YM +4.0 & XM +3.5) are richer and near session highs despite a beat by December Retail Sales.

• Retail sales fell 0.1% m/m (estimate -0.7%) in December, the first drop since March 2024, versus a revised +0.7% in November.
• Building approvals rose 0.7% m/m (estimate +1.0%) in December versus a revised -3.4% in November.
• ANZ job advertisements rose 0.2% m/m in January versus +0.3% in December.
• The strengthening observed during the session appears more closely linked to movements in U.S. Treasuries following the weekend’s US tariff announcements and the subsequent retaliatory measures by Canada and Mexico. China has also indicated it will implement countermeasures and file a complaint with the World Trade Organization.
• In today’s Asia-Pacific session, cash US tsys have twist-flattened, with yields ranging from 6bps higher to 1bp lower. This week’s focus will be on a heavy slate of corporate earnings, key CPI and PPI inflation data, and January’s headline employment report.
• Cash ACGBs are 4-5bps richer with the AU-US 10-year yield differential at -15bps.
• Swap rates are 4bps lower.
• The bills strip is richer, with pricing +2 to +6.

• Last week saw an amazing turnaround from gold to finish 1.00% better for the week after a very poor day, Monday.
• Gold has started this week with a weakening bias, off from Friday’s close of US$2,798.41 to be at $2,792.58 in morning trading.
• Whilst gold’s ‘safe-haven’ status usually prevails, a strengthening USD on the back of tariff news won over sending gold lower this morning.
• The US announced 25% tariffs on goods from Mexico and Canada, and 10% from China coming into effect from Tuesday.
• The potential for a global trade war is now real and in any period of uncertainty the USD strengthens and already has moved by enough to offset gold’s safe haven status.
• That said, gold has started 2025 where it left off last year, performing well and up over 5% year to date. 
•  JPMorgan announced that it plans to deliver US$4bn of gold bullion this moth against contracts that expire in February, representing one of the largest physical settlements on record. 

• MNI: AUSTRALIA DEC BUILDING APPROVALS +0.7% M/M, +12.2% Y/Y