GOLD: Largely Holding Tuesday's Gains, China Added To Gold FX Reserves in Dec
Gold prices have tracked mostly sideways in the first part of Wednesday trade. We were last near $2647, little changed versus end Tuesday levels in the US. Tuesday's 0.46% gain was aided by the pull back in equity sentiment, with a firmer USD/yields not enough to offset in term's of aggregate performance. Intra-session highs from Tuesday were around $2664.3. Better US data outcomes did help take off this level in Tuesday trade. We remain above the simple 100-day MA, which has been a support point in recent months.
- Outside of traditional macro drivers, China's FX reserves data for Dec showed the central bank continued to add to gold reserves in the month. It resumed such purchases in Nov, after no change in the prior 6 months.
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STIR: RBA Dated OIS Easing Expectations Strengthen But Not For Tomorrow
RBA-dated OIS pricing has eased by 1–3bps across 2025 meetings ahead of tomorrow’s RBA policy decision.
- A 25bps rate cut is now nearly fully priced for April, with the probability rising to 95%. However, a full rate cut is not anticipated until May.
- Market expectations for the September meeting have softened by approximately 40bps since mid-November, driven by concerns over weakening domestic economic growth. Notably, in mid-November, a full 25bps cut wasn’t expected until August, marking a significant shift toward earlier rate cuts.
- Despite the broader repricing, the probability of a rate cut at the December meeting remains low, with markets assigning only a 9% chance.
Figure 1: RBA-Dated OIS – Today Vs. Mid-November
Source: MNI – Market News / Bloomberg
AUSSIE BONDS: Narrow Ranges On A Data-Light Session Ahead Of RBA Decision Tomorr
ACGBs (YM +2.0 & XM +2.0) are holding stronger after dealing in narrow ranges on a data-light Sydney session.
- The domestic focus of this week will be tomorrow’s RBA decision and Thursday’s November jobs data after October disappointed. The cash rate is unanimously forecast to remain at 4.35% and so the guidance will be monitored closely for any changes. The RBA meeting will be followed by Governor Bullock’s press conference.
- Bloomberg consensus is again forecasting a 25k increase in employment in November with the unemployment rate rising 0.1pp to 4.2%. The RBA is projecting it to rise to 4.3% in Q4 2024.
- Cash US tsys are ~1bp richer in today’s Asia-Pac session after Friday’s modest post-payrolls gains. Reminder, the Federal Reserve entered its self-imposed blackout at midnight Friday through December 19. The focus is this week's CPI and PPI inflation data on Wednesday and Thursday respectively.
- Cash ACGBs are 2-3bps richer with the AU-US 10-year yield differential at +6bps.
- Swap rates are 2-3bps lower.
- The bills strip has bull-flattened, with pricing flat to +4.
- RBA-dated OIS pricing is 1-4bps softer across 2025 meetings. A 25bp rate cut is 95% priced for April. The market attaches a 9% chance of a 25bps cut tomorrow.
MNI EXCLUSIVE: Reaction To Australia's Poor Productivity
Former RBA staffers react to last week's poor productivity growth data.
On MNI Policy MainWire now, for more details please contact sales@marketnews.com
