AUSSIE BONDS: Richer With US Tsys After ISM Services Disappoints

The Census Bureau confirmed today: "Due to the executive order closing the federal government on January 9, 2025, the Monthly Wholesale Trade Report will now be released on Wednesday, January 8 at 10:00 a.m."

• That's in line with shifts forward in Treasury auctions and jobless claims data, and leaves the Challenger job cuts report (a private sector release, not from government) as the only US data still scheduled to be released Thursday.

Yen notably lagged broader USD softness for Monday's session. Yen lost around 0.20% against the dollar, with USD/JPY currently sitting in the 157.55/60 region in early Tuesday dealings. USD/JPY did see a sharp pull back to 156.24 in Monday trade, post the Asia close, as the Washington Post suggested incoming US President Trump could water down his tariff plans. Broader USD sentiment recovered to some degree though, as Trump stated the report was fake news. 

• Yen's 0.20% loss contrasts with the both the BBDXY and DXY indices off around 0.60-0.65% for Monday's session. This left yen comfortably the worst performer in the G10 space, with all the other majors up against the USD.
• For USD/JPY, technicals remain skewed higher in the pair. near term focus will rest on 158.08, the Dec 26 high from last year. The 20-day EMA is back at 155.89 on the downside.
• The advance in global equity markets on Monday, led by EU markets, likely weighed on yen relative to the rest of the G10, although US markets finished off highs as Trump denied the water down tariff plan. US yields were mixed, the front end softer, but back end yields held modest gains, the 10yr up to 4.62%.
• The local data calendar just has the Dec monetary base figures today, which is unlikely to move market sentiment.
• Market pricing for a BoJ hike at the Jan meeting remains under 50% priced at this stage, sub mid Dec highs. Governor Ueda reiterated yesterday the path for rates is higher but timing still remains uncertain. Note next Tuesday we hear from Deputy Governor Himino. 

In local morning trade, NZGBs are 1bp cheaper after US tsys finished slightly mixed with the short end outperforming.

• Early market swings were tied to a Washington Post article reporting that the Trump administration was "exploring plans" to apply tariffs to every country “but only cover critical imports.” The report suggests that Trump’s initial tariff plan may track relatively closely with the Biden administration’s targeted tariffs.
• Both rates and equities surged higher on the article - until Trump denied the watered down approach - with Treasuries reversing course and extending lows by midmorning.
• Record corporate debt issuance for a single session climbed over $50B, rate lock hedging added additional pressure to rates.
• Tuesday’s US data calendar includes JOLTS, ISM Services and Tsy 10Y Re-Open.
• Swap rates are 1-2bps higher.
• RBNZ dated OIS pricing is little changed. 52bps of easing is priced for February, with a cumulative 127bps by November 2025.
• Barfoot noted that average Dec house prices rose 4.7%m/m, although sales and new listings were down compared to Nov levels.
• Today, the local calendar is empty ahead of ANZ Commodity Prices, the sole release for the week.