AUSSIE BONDS: Little Changed Ahead Of Tariff Announcement, Bldg Apps Trend Up
Apr-02 01:53
ACGBs (YM -1.0 & XM +1.0) are little changed after dealing in narrow ranges in today’s local session.
- There was a small payback in February non-house building approvals after the sharp rise over December/January. Nevertheless, looking through the volatility the total number is trending robustly higher. While it fell 0.3% m/m in February, less than expected, it was up 25.7% y/y after 21.6% and 3-month annualised momentum continues to run just under 30%. There has been a significant demand/supply imbalance in Australian housing and the positive trend in building approvals is welcome news.
- Cash US tsys are ~2bps cheaper after yesterday's modest gains ahead of Wednesday afternoon's Liberation (tariff) Day announcement from the White House (1600ET est). Trump's tariffs will take immediate effect after they are announced.
- Cash ACGBs are 1bp richer to 1bp cheaper, with the 3/10 curve flatter and the AU-US 10-year yield differential at +21bps.
- Swap rates are 2-3bps lower, with EFPs tighter.
- The bills strip is +1 to +2 across contracts beyond the first (-1).
- RBA-dated OIS pricing is slightly firmer today. A 25bp rate cut in May is given a 77% probability, with a cumulative 72bps of easing priced by year-end (based on an effective cash rate of 4.09%).
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MNI: CHINA FEB CAIXIN MANUFACTURING PMI 50.8 VS 50.1 IN JAN
Mar-03 01:49
- CHINA FEB CAIXIN MANUFACTURING PMI 50.8 VS 50.1 IN JAN
ASIA STOCKS: Equities Mixed On Geopolitical Tensions
Mar-03 01:40
Asian equity markets are mixed today amid a complex backdrop of global trade tensions, US economic data, and regional policy expectations.
- Japanese shares rebounded, with the Topix Index rising 1.30% and the Nikkei advancing 1%, driven by gains in automakers like Toyota (+2.5%) and financial stocks, as softer US inflation data (core PCE up 0.3% month-on-month and 2.6% year-on-year) fueled expectations of potential Federal Reserve rate cuts, while a pause in yen appreciation encouraged buying.
- South Korea is out for Independence day, while Taiwan's TAIEX is trading 1.60% lower.
- Chinese stocks face uncertainty as investors await the NPC outcome on March 5, with hopes pinned on a robust fiscal stimulus to counter weak domestic demand and US tariff threats, though Hong Kong stocks are supported by growing mainland Chinese investment, which hit HK$153b net in February.
- Australia's ASX 200 edging up 0.3%led by banks and property stocks. New Zealand’s S&P/NZX 50 dipped 0.6%
- Elsewhere, the yen is poised for further gains as a safe-haven asset amid falling US Treasury yields and rising volatility, while the Australian dollar appears vulnerable due to trade concerns and reliance on Chinese policy clarity. Trump’s tariff plans, set to escalate on March 4, continue to weigh on sentiment, particularly for China-linked markets, though southbound flows into Hong Kong may mitigate some pressure.
AUSSIE BONDS: Cheaper With US Tsys After Security Summit, Q4 Partials Beat
Mar-03 01:37
ACGBs (YM -3.0 & XM -4.0) are weaker after today’s domestic data drop.
- Inventories rose 0.1% q/q (estimate 0%) in Q4 versus a revised -0.7% in Q3.
- Company profits rose 5.9% q/q in Q4.
- ANZ-Indeed job advertisements dropped 1.4% m/m in February.
- Cash US tsys are 3-4bps cheaper in today’s Asia-Pac session after an emergency security summit in London on Sunday raised bets of increased European debt supply for defence spending. UK Prime Minister Keir Starmer convened the summit, including France’s Emmanuel Macron, as well as delegations from Canada, Germany, Norway and Turkey, in a bid to strengthen Ukraine’s position, secure a “lasting peace” and plan for security guarantees. (per BBG)
- Cash ACGBs are 3-4bps cheaper with the AU-US 10-year yield differential at +9bps.
- Swap rates are 3-4bps higher.
- The bills strip has bear-steepened, with pricing flat to -4.
