AUSSIE BONDS: Still Holding Twist-Flattener But Yields Lower
ACGBs (YM -11.0 & XM +10.5) continues to hold a twist-flattening, but pricing has shifted higher versus opening levels.
- Cash US tsys are dealing 5-6bps richer in today's Asia-Pac session after yesterday's extreme volatility, sparked by President Trump's tariff reversal tweet.
- "It took a week for the plunge in the stock and bond markets -- along with a sustained campaign by executives, lawmakers, lobbyists and foreign leaders -- to prompt Trump to roll back for 90 days a major element of his sweeping tariff plan. ” (per WSJ via BBG see link)
- The MI’s measure of consumer inflation expectations for April rose 0.6pp to 4.2%. Q1 CPI is released on April 30 and will be a key input into the May 20 RBA decision, which has been clouded by recent US tariff and subsequent market developments.
- Cash ACGBs are 10bps cheaper to 10bps richer with the AU-US 10-year yield differential at +bps.
- Swap rates are 9bps higher to 9bps lower, with the 3s10s curve flatter.
- The bills strip has bear-flattened, with pricing -7 to -18.
- RBA-dated OIS pricing is 12-20bps firmer across meetings today. A 50bp rate cut in May is given a 40% probability, with a cumulative 119bps of easing priced by year-end.
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AUD: A$ Continues To Be Pressured By Weak Risk Appetite, AUDNZD Slightly Higher
The risk-off tone continues to weigh on risk-sensitive Aussie with regional equity markets following the US lower after the S&P fell 2.7% on Monday. AUDUSD is off its intraday low of 0.6259 but is still down slightly to 0.6276 after a high of 0.6285 earlier. The USD is also lower with the BBDXY down 0.2%.
- AUDJPY is 0.4% lower at 92.10 as the yen benefits from flight-to-quality flows. The pair is off its intraday low of 91.82 though. AUDEUR is also down 0.3% to 0.5778 and AUDGBP -0.2% to 0.4867.
- Kiwi is also struggling given the deterioration in risk appetite leaving AUDNZD 0.1% higher at 1.1028, close to today’s high.
- Survey data showed a sharp improvement in Westpac’s consumer confidence measure in March boosted by lower inflation and the February rate cut. NAB’s February business confidence deteriorated but it has been volatile, while conditions were little changed. Prices moderated but costs were higher.
- Equities are selling off with the ASX down 1.3%, Nikkei -2.3%, Hang Seng -1.4% and S&P e-mini -0.6%. Oil prices are off today’s lows but WTI is still -0.5% to $65.72/bbl. Copper is 0.4% lower and iron ore continues to trade around $100-101/t.
- Later US January JOLTS job openings/layoffs print and given growth concerns are likely to be monitored closely. Bloomberg consensus is for steady 7600k vacancies and a slight pickup in layoffs to 1806k. The Eurogroup/Ecofin meetings take place today.
CHINA PRESS: Car Prices Down During Jan And Feb
China saw new car average prices reach CNY30,000 during the first two months of the year, a decrease of 12.6%, with new energy vehicles down 13%, data from the Passenger Car Association showed. Plug-in hybrid models saw price reductions of less than 10%, indicating stronger demand, the Association said. The market will heat up after March as the government introduces subsidies, easing the ongoing price war.
CHINA PRESS: Second-hand Housing Markets Recover Further
China’s second-hand housing market transaction volume increased 38.45% y/y last week in 10 key cities, continuing the recent recovery, Securities Times reported. Second-hand transactions in first-tier Shenzhen have risen five consecutive weeks as purchasing sentiment increased, the newspaper said. Key cities are anticipated to ease restrictive policies further, while all regions are set to intensify efforts to support buyers utilising their Housing Provident Fund, according to the China Index Academy.
