OIL: Oil Prices Steady - On Track for Biggest Weekly Decline for Year. 

NZGBs closed at session bests, 1bp richer across benchmarks, after reversing weakness seen in the aftermath of this morning’s Q4 Labour Market data.

• The Q4 unemployment rate rose 0.3pp to 5.1%, in line with consensus and the RBNZ, to be its highest since the Covid-impacted Q3 2020. Employment fell 0.1% q/q to be down 1.1% y/y after -0.6% & -0.6% in Q3, which was revised lower.
• Wages growth continues to moderate and is either near 3% or under.
• Given the data printed close to the RBNZ’s November forecasts, which also suggested a 50bp rate cut in Q1 2025, another 50bp on February 19 remains likely.
• Swap rates closed 2-4bps higher, with the 2s10s curve flatter.
• RBNZ dated OIS pricing closed 1-5bps firmer across meetings. 49bps of easing is priced for February, with a cumulative 126bps by November 2025.
• The local calendar is empty for the rest of the week.
• Tomorrow, the NZ Treasury plans to sell NZ$225mn of the 4.50% Apr-27 bond, NZ$225mn of the 2.00% May-32 bond and NZ$50mn of the 2.75% May-51 bond.

At the Tokyo lunch break, JGB futures are hovering near session lows, -20 compared to the settlement levels.

• According to MNI’s technicals team, a clear downtrend in JGB futures remains intact and the latest fresh cycle lows reinforce this condition. Note too that moving average studies on the continuation chart are in a bear-mode setup, highlighting a clear downtrend. The move down exposes the 140.00 psychological handle next. For bulls, a reversal would open 142.73 and 144.48, the Dec 9 and Nov 11 high respectively. For now, short-term gains are considered corrective.
• Inflation-adjusted real wages, a barometer of household purchasing power, posted their second straight monthly rise in December, up 0.6% against November's 0.5%. The year-on-year rise in total CPI minus imputed rents accelerated to 4.2% in December from 3.1% in November, but real wages were boosted by higher nominal wages and bonuses.
• Cash US tsys are slightly cheaper in today’s Asia-Pac session after yesterday’s modest rally. 
• Cash JGBs are flat to 2bps cheaper across benchmarks, with a flattening bias. The benchmark 10-year yield is 1.8bps higher at 1.297% versus a fresh cycle high of 1.301% earlier today.
• Swap rates are flat to 2bps higher. Swap spreads are mixed.

Asian equities are mixed today as trade tensions weighed on sentiment, with US-China tariffs and US Postal Service suspending inbound parcels from China adding to uncertainty. Investors remain cautious amid signs of slowing Chinese services activity and a weakening yuan, though Goldman Sachs sees potential for a 14% rally in the MSCI China Index if Beijing delivers strong stimulus.

• Chinese stocks fell as investors returned from the Lunar New Year break, reacting to escalating US-China trade tensions. The CSI 300 dropped 0.6%, while the Hang Seng China Enterprises Index slumped 2%. Tech shares outperformed, led by AI software firms after DeepSeek’s release of a lower-cost large language model, though AI hardware stocks weakened on concerns about reduced infrastructure spending.
• Japanese stocks erased early gains as the yen strengthened on expectations of further BOJ rate hikes following strong wage data. The Nikkei is 0.20% lower after rising 0.8% earlier, while the Topix trade flat with banks like Mizuho and MUFG benefiting from rate hike speculation.
• In South Korea the Korea Development Bank announced plans to create a ₩34 trillion ($25.5b) tech fund to support sectors like batteries and biotech, pending parliamentary approval. The KOSPI is trading 1.20% higher today. Taiwan's TAIEX is 1.75% higher as  TSMC trade 1.90% higher.
• Australia's ASX 200 rebounded 0.55% after Monday’s losses, tracking Wall Street gains. Mining stocks outperformed, with BHP, Fortescue, and Rio Tinto rising over 2%. Gold stocks also gained as the gold price hit a record $2,845/oz.