JGB TECHS: (M5) Within Range of Fresh Cycle Lows

The Australian Office of Financial Management (AOFM) will today sell A$800mn of the 3.75% 21 April 2037 bond. The line was last sold on 6 December 2024 for A$800mn. The sale drew an average yield of 4.3459%, at a high yield of 4.3475% and was covered 3.2188x. There were 34 bidders, 14 of which were successful and 7 were allocated in full.

• This week's ACGB supply is larger with the usual weekly issuance of A$1.5bn, with A$300mn of the 4.25% 21 June 2034 Green bond issued on Monday and A$700mn of the 1.75% 21 November 2032 bond on Friday.
• According to the MYEFO 2024-25 Issuance Program Update from the Australian Office of Financial Management (AOFM), total issuance has been revised to approximately A$95 billion, with A$46.4 billion completed. This includes around A$2 billion in Green Treasury Bond tenders, of which A$600 million has been issued, and A$3 billion in Treasury Indexed Bonds, with A$1.7 billion completed.
• The previous auction saw solid demand, with the weighted average yield coming in 0.61bps through prevailing mid-yields, continuing the trend of firm pricing at recent ACGB auctions. The cover ratio also rose significantly to 3.22x, up from a relatively weak 2.50x at the prior auction, also indicating stronger investor participation
• Results are due at 0000 GMT / 1100AEST.

• Having hit new highs of US$2,956.19 gold declined into the US close to $2,914.76 in what appears to be profit taking.
• In the US overnight, risk off sentiment prevailed as equities trended lower as data showed the US consumer confidence was weaker and the Dallas Fed Services lower giving a bid to US Treasuries with futures back at mid -December highs.
• Weak data suggesting rate cuts usually drives gold higher but as bullion continues to hit new highs (up over 10% year to date) it is not surprising that some profits are being booked.
• The key drivers for gold remain positive with a deteriorating geopolitical environment due to the threat of tariffs, potential rate cuts and Central Banks resuming gold purchases.
• With reporting season in process for gold miners’ shares are up as profits surge and strategists globally revise up their forecast for gold.
• Flows into gold by retail remain strong also with some of the biggest ETF’s having inflows of up to 20%.
• Despite being in the grip of civil war for years, the North African nation of Sudan’s government support for the gold industry has paid dividends with revenues up over $1bn and new supply deals signed with China, Russia and Qatar (as per BBG).

• Tsys had another strong session, with yields reaching YTD lows. Early moves occurred during European morning following Trump administration’s latest tariff threats, consumer confidence data then came out showing it has declined more than expected to the lowest level since June, while later in the session US Treasury Sec Bessent reiterated the administration’s focus on lower yields, and finally there was the auction of five-year bonds which drew strong demand.
• TU closed +0-04 at 103-01⅞, while TY closed +0-20+ at 110-16+ we have continued these moves in early morning trading in Asia today. In Tsys options, there was continued buying of a call anticipating the 10yr yield will fall to at least 4.15%.
• Cash tsys curve continued the flattening move of the past few weeks, with yields closing 7-11bps richer across the curve. The 2yr closed -7.4bps at 4.094%, while the 10yr closed -10.6bps at 4.294%. The 2s10s fell 2.7bps at 19.619
• The $70b 5yr note auction saw strong demand, clearing at 4.123%, slightly below the 4.133% when-issued yield. Treasuries held gains post-auction. Indirect bidders took 74.9%, while primary dealer awards (10.6%) were among the lowest on record, and direct awards fell to 14.5%. The bid-to-cover ratio was 2.42, slightly above the recent average. Demand was supported by Monday’s strong 2yr auction and short covering, though a lack of concession limited upside.
• Data: Conference Board's consumer confidence composite fell to 98.3 from 105.3 prior (102.5 expected), led by a drop in expectations to 72.9 from 82.2. February's Philadelphia Fed Non-Manufacturing survey showed a deterioration in current regional activity to a 6-month low -13.1 from -9.1 prior (no consensus).
• Later today, New Home Sales and building permits & US Treasury auctions $44B 7Y notes at 1300ET.