AUSSIE BONDS: Little Changed After Q4 Wages Data, Jobs Data Tomorrow

Oil is close to flat during APAC trading today with Brent around $80.70/bbl after an intraday low of $80.76 and WTI $77.44 following a drop to $77.25/bbl. US President-elect Trump said he’ll declare a national energy emergency to unlock powers, but the impact of his administration on oil prices remains unclear. The USD index is down 0.3%.

• Trump wants to use a “national energy emergency” to be able to increase domestic oil and gas production and reverse Biden’s climate change policies, according to Bloomberg. Uncertainty remains elevated though with no details on how this declaration would be used or its impact on domestic and global markets or if he will even be able to use it. Thus, there has been little market response to the news.
• In response to questions on the issue, Trump said on Sunday “we’re going to be using our emergency powers to allow countries and entrepreneurs and people with a lot of money build big plants, AI plants, ... We need double the energy that we already have”.
• Action on sanctions against Iran and Russia and tariffs on Canada, a large oil supplier to the US, are also significant uncertainties that oil markets are awaiting direction on. The Treasury secretary nominee Bessent has indicated that measures against Russia should be tightened.
• The US is closed for the Martin Luther King holiday but attention is on President-elect Trump’s inauguration later today and which executive orders he’ll sign on the first day.
• Later the Eurogroup meeting takes place and German December PPI, euro area November construction and the BoC business survey are released. 

ACGBs (YM +1.0 & XM +0.5) are slightly stronger after a subdued session.

• The local market has lacked direction with the local calendar empty and cash US tsys out for Martin L. King Day.
• Cash ACGBs are flat to 1bp richer.
• Swap rates are 1bp lower.
• The bills strip is flat to -1 across contracts.
• RBA-dated OIS pricing is flat to 2bps softer across meetings today. A 25bp rate cut is fully priced for April (102%), with the probability of a February cut at 62% (based on an effective cash rate of 4.34%).
• The local calendar is light this week after key December labour market data last Thursday. The highlights are the Westpac Leading Index on Wednesday and S&P Global PMIs (P) on Friday. The focus is now on Q4 CPI data released on Wednesday, January 29.
• Today's sale of the A$300mn of the 4.25% 21 June 2034 green bond drew a cover ratio of 5.18x, the highest on record for the green bond.
• The AOFM plans to sell A$800mn of the 2.75% 21 June 2035 bond on Wednesday and A$700mn of the 1.50% 21 June 2031 bond on Friday. 

In the week ending 14th of Jan (last Tuesday), CFTC positioning flows were mixed across leveraged and asset managers. In the leveraged space, GBP longs were trimmed notably. GBP has been an underperformer since the start of the year (down along with CAD), while other G10 currencies are higher YTD), as twin deficit/financial stability concerns weigh on the pound. Still, leveraged investors can cut GBP longs further. Asset managers cut GBP shorts, albeit modestly, and comfortably maintain an outright short. 

• Yen positions saw little shift from a leveraged standpoint, but asset managers added to shorts.
• For the AUD, leveraged names added to shorts, but asset managers provided some offset (although remain outright short).
• The table below for the full break down and changes in the week to 14th of Jan. 

Table: CFTC Positioning By Currency & Investor Type (Week Ending Jan 14 2025) 

Source: CFTC/BBG/MNI - Market News