GOLD: Gold Prices Lower but Delivers Another Strong Week.  

Oil prices are moderately lower today due to a large rise in US crude inventories and rising global growth concerns from an increase in protectionism. Brent is down 0.4% to $75.87/bbl after a low of $75.77. It reached a high of $76.34 early in the session. WTI is 0.3% lower at $72.45/bbl after falling to $72.36 and an earlier high of $72.97. The USD index is down 0.1%.

• The sell off in oil has been muted following the new US administration’s policy to be tougher on Iran. Relaxed enforcement of sanctions allowed it to increase oil exports by around 1mbd over the last four years.
• Markets are more concerned about the overall impact on global growth from increased protectionism rather than China’s retaliation on US oil and gas. China’s crude imports are already less than 5% of the US total, according to Bloomberg, and are expected to easily find alternative destinations.
• Bloomberg reported that US crude inventories rose 5.025mn barrels last week, according to people familiar with the API data. There has been a sharp increase in flows from Canada to the US to beat the imposition of tariffs, which may continue given the delay is only 30 days. In terms of products, gasoline rose 5.426mn while distillate fell 7mn. The official EIA data are out later today.
• Later the Fed’s Barkin, Goolsbee and Bowman appear and US January ADP employment, December trade and January services PMI/ISM print. Also the ECB’s Lane speaks and January European services/composite PMIs and euro area December PPI data are released.

NZGBs closed at session bests, 1bp richer across benchmarks, after reversing weakness seen in the aftermath of this morning’s Q4 Labour Market data.

• The Q4 unemployment rate rose 0.3pp to 5.1%, in line with consensus and the RBNZ, to be its highest since the Covid-impacted Q3 2020. Employment fell 0.1% q/q to be down 1.1% y/y after -0.6% & -0.6% in Q3, which was revised lower.
• Wages growth continues to moderate and is either near 3% or under.
• Given the data printed close to the RBNZ’s November forecasts, which also suggested a 50bp rate cut in Q1 2025, another 50bp on February 19 remains likely.
• Swap rates closed 2-4bps higher, with the 2s10s curve flatter.
• RBNZ dated OIS pricing closed 1-5bps firmer across meetings. 49bps of easing is priced for February, with a cumulative 126bps by November 2025.
• The local calendar is empty for the rest of the week.
• Tomorrow, the NZ Treasury plans to sell NZ$225mn of the 4.50% Apr-27 bond, NZ$225mn of the 2.00% May-32 bond and NZ$50mn of the 2.75% May-51 bond.

At the Tokyo lunch break, JGB futures are hovering near session lows, -20 compared to the settlement levels.

• According to MNI’s technicals team, a clear downtrend in JGB futures remains intact and the latest fresh cycle lows reinforce this condition. Note too that moving average studies on the continuation chart are in a bear-mode setup, highlighting a clear downtrend. The move down exposes the 140.00 psychological handle next. For bulls, a reversal would open 142.73 and 144.48, the Dec 9 and Nov 11 high respectively. For now, short-term gains are considered corrective.
• Inflation-adjusted real wages, a barometer of household purchasing power, posted their second straight monthly rise in December, up 0.6% against November's 0.5%. The year-on-year rise in total CPI minus imputed rents accelerated to 4.2% in December from 3.1% in November, but real wages were boosted by higher nominal wages and bonuses.
• Cash US tsys are slightly cheaper in today’s Asia-Pac session after yesterday’s modest rally. 
• Cash JGBs are flat to 2bps cheaper across benchmarks, with a flattening bias. The benchmark 10-year yield is 1.8bps higher at 1.297% versus a fresh cycle high of 1.301% earlier today.
• Swap rates are flat to 2bps higher. Swap spreads are mixed.