SOUTH KOREA: Revised GDP in Line with Expectations for Fourth Quarter. 

• Friday's session was dominated but tariffs headlines, tsys futures closed lower across all contracts, however we are opening mixed in Asia as trading gets underway with long end outperforming. TU closed -0-02⅝ at 102-26, and is another -0-01⅝ this morning at 102-24⅜, while TY dropped 12+ on Friday to 108-27, and is another -01+ this morning at 108-25+.
• Focus will be all on any further Tariffs headlines, Canada have announced they will retaliate with 25% tariffs, while Mexico have said they will impose something on the US however no further details yet.
• Cash tsys curves steepened on Friday, with yields closing -1bps to +3bps. The 2yr closed -0.9bps at 4.197%, while the 10yr closed +2.3bps at 4.539%. The 2s10s jumped 3bps to 33.749, while the 2s20s saw the largest steepening rising 4bps to 64.088.
• Hedge funds aggressively increased net short positions in SOFR and 10yr note futures in the week ending Jan. 28, with a net duration short increase of approximately 250k 10yr futures equivalents, the largest since November. They extended their net short in 10y futures by $13.3m/DV01 and in SOFR futures by $5.3m/DV01, while covering $3.9m/DV01 in Ultra 10yr note futures. Meanwhile, asset managers added to net long positions, extending their duration long by 146,000 10yr futures. They were most bullish on 5yr note futures, increasing their net long by $8.7m/DV01, while also extending net longs in 10yr note futures by $4.1m/DV01.
• Later today, we have S&P Global US Manufacturing PMI, ISM Manufacturing while later in the week focus will turn to corporate earnings, key CPI, PPI inflation measures and headline employment data for January.

• RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 1: 95.625/851 - High Jan 30 / High Dec 11 
• PRICE: 95.560 @ 16:35 GMT Jan 31
• SUP 1: 95.275 - Low Nov 14  (cont) and a key support 
• SUP 2: 94.477 - 1.000 proj of the Dec 11 - 23 - 31 price swing
• SUP 3: 94.495 - 1.0% 10-dma envelope

The Aussie 10-yr futures contract continues to trade below the Dec 11 high of 95.851. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish theme. For bulls, a confirmed reversal and a breach of 95.851, the Dec 11 high, would instead reinstate a bull cycle and refocus attention on resistance at 96.207, a Fibonacci retracement point.  

This week’s focus is likely to be on today’s December and Q4 retail sales data as it will be the first release that gives an indication for the outlook for GDP and given recent weakness in consumption.

• Q4 retail sales volumes are forecast to rise 0.8% q/q after 0.5%. This would be the second straight quarterly rise. Bloomberg respondents vary between +0.5% q/q and 1.5%.
• December retail sales are expected to fall 0.7% m/m after rising 0.8% due to the shifting seasonal trends with November discounting front loading festive spending.
• The January Melbourne Institute inflation gauge prints today. It moderated to 2.6% y/y in December from 2.9% but is still above August’s low.
• ANZ-Indeed job ads are also today. They rose 0.3% m/m in December to be higher in three of the last four months. Vacancies are off their peak but remain elevated.
• December building approvals are also out Monday and forecast to rise 1% m/m after falling 3.6% m/m in November. Private homes were down 1.7% m/m.
• On Tuesday household spending for December prints. The series is due to replace retail sales around mid-year. Bloomberg consensus has it rising 0.4% m/m to be up 3.4% y/y after 2.4% in November.
• Final January S&P Global services/composite PMIs are released on Wednesday. They are hovering just above the breakeven-50 level.
• On Thursday, December trade data is out and the surplus is expected to narrow to $6.5bn from $7.08bn.