GOLD: Gold Rises Again as Equities Struggle 

The USD BBDXY index sits up from earlier lows, last near 1268.5. Earlier we got to 1265.328, as dollar sentiment was weighed by US growth/recession concerns. Safe havens JPY and CHF have been the outperformers, although sit away from best levels. 

• Weekend comments from US President Trump, which didn't appear to rule out a recession, given the large economic transitions the administration is embarking on, hurt US equity futures from the open. Eminis sunk more than 1%, but sit better now, last off -0.45%.
• US Tsy futures spiked, but likewise, sit off highs. US 10yr yields opened near 4.255%, but sit back near 4.28% now.
• USD/JPY got to lows of 147.09, but sits back at 147.60 in latest dealings, still 0.30% stronger in yen terms. USD/CHF was last near 0.8785, up around 0.15% in CHF terms.
• We had Japan labor earnings data, where the headline figures were below expectations. Weaker bonus payments compared to Dec appeared to be in play. Underlying details on core pay was still firm.
• AUD/USD and NZD/USD have been range bound. The A$ was last near 0.6305/10. Session lows were at 0.6296, with a weaker yuan/softer China/HK equity backdrop not helping sentiment. Weekend data on China inflation showed CPI and PPI in negative territory. NZD/USD was last at 0.5710/15.
• USD/CAD has been relatively steady, last around the 1.4365 level. The new Prime Minister for Canada will be Mark Carney the former head of the BOC and BoE.
• EUR/USD got to highs of 1.0871, but sits back in the 1.0830/35 region now, little changed. EU equity futures are up around 0.80%, continuing to highlight relative EU outperformance compared to the US.
• Looking ahead, we have second tier EU data, while in the US it is just the NY Fed Survey of Consumer Expectations print on tap. 

ACGBs (YM -3.0 & XM -3.0) are cheaper and near the session’s worst levels on a data-light session. 

• Cash US tsys are 2-3bps richer across benchmarks in today’s Asia-Pac session as Asian traders digested Friday’s US jobs data and remarks from Federal Reserve Chair Jerome Powell.
• Cash ACGBs are 2-3bps cheaper with the AU-US 10-year yield differential at +15bps.
• Swap rates are 1-2bps higher.
• The bills strip is flat to -2 across contracts.
• RBA-dated OIS pricing is little changed across meetings today.
• Nevertheless, pricing remains mixed compared to February’s pre-RBA Decision levels—meetings through May are 3-4bps firmer, while those beyond are flat to 14bps softer. A 25bp rate cut in April is given a 9% probability, with a cumulative 64bps of easing priced by year-end (based on an effective cash rate of 4.09%).
• Tomorrow, the local calendar will see Westpac Consumer and NAB Business Confidence data.
• This week, the AOFM plans to sell A$300mn of the 2.75% 21 May 2041 bond tomorrow and A$800mn of the 3.50% 21 December 2034 bond on Wednesday.

Today’s 5-year bond auction demonstrated weak demand metrics, with the auction price failing to meet expectations of 99.73. Moreover, the cover ratio declined to 3.1658x from 3.8158x and the auction tail lengthened to 0.07 from 0.03.

• These results align with the poor demand metrics observed at this month’s 10-year auction.
• Given that today’s 5-year was offering a yield 15-20bps higher than last month, marking a cyclical peak, the outcome is likely to be viewed as disappointing.
• Following the auction, the 5-year JGB has cheapened ~0.5bp in early afternoon trading, while JGB futures have weakened, retreating to session lows.