FOREX: Yen Underperforms Amid US Yield Rise, Ueda In Parliament

ACGBs (YM +6.0 & XM +7.5) are holding stronger on a data-light session with narrow ranges.

• There is no cash US tsy trading in the Asia-Pac session today with Japan closed for the Emperor’s Birthday holiday.  TYH5 is dealing -0-04 compared to closing levels at 109-18.
• (AFR) “Time for a Bex and good lie down after RBA rate call” by Stephen Miller (see BBG link)
• Cash ACGBs are 7bps richer.
• Swap rates are 7bps lower.
• The bills strip has bull-flattened, with pricing +1 to +7.
• RBA-dated OIS pricing is flat to 6bps softer across 2025 meetings today but remains 1-3bps firmer than last Tuesday’s pre-RBA levels. A cumulative 48bps of easing priced by year-end (based on an effective cash rate of 4.09%).
• Tomorrow, the local calendar is empty, ahead of January's CPI Monthly on Wednesday.
• The AOFM plans to sell A$800mn of the 3.75% 21 April 2037 bond on Wednesday and A$700mn of the 1.75% 21 November 2032 bond on Friday.     

It has been a rather quiet session for Asian equities this morning, with both Hong Kong & China equities outperforming the sell-off we saw in US equities on Friday night, those moves came after there were reports of a new bat coronavirus study. While tension remain somewhat elevated as Trump moved to restrict Chinese investment in some strategic US industries, while also considering further restrictions on outbound investment to Beijing in sectors including semiconductors and AI.  

• The Hang Seng Index is 0.50% lower, with the Hang Seng Tech Index dropping 1.5%, following Friday’s sharp rally. US-China trade tensions weighed on sentiment, with Wuxi Biologics (-8.9%) and Wuxi AppTec (-8.7%) hit after the U.S. moved to restrict Chinese investment in healthcare. Lenovo (-5.2%) and Kuaishou (-6%) also declined. However, travel stocks outperformed, with Trip.com (+4.4%) and Tongcheng Travel (+3.1%) rising.
• Mainland equities are also lower, with the CSI 300 and Shanghai Composite both down 0.1%. Property stocks gained on expectations of policy support at the upcoming National People’s Congress, with Sunac China (+12%) and China Vanke (+8.2%) leading gains, the BBG China Property Developer Gauge is 2.50% higher. Robotics stocks advanced on reports that Shenzhen will establish a ¥10b industry fund to support AI and robotics, lifting Shengtong Printing (+10%) and Shenzhen Invt Electric (+8.4%). Meanwhile, Chinese shipping stocks declined after the U.S. proposed fees on Chinese-built vessels.
• There isn't anything major on the data front this week for China, while Hong Kong has trade balance data out tomorrow, followed by GDP numbers on Wednesday

• Gold sold off in early trading in Asia today, before staging a comeback.
• Opening at US$2,935.45, gold sold off to a low of $2,921.48 before rebounding back above opening levels to be at $2,941.95.
• Year to date Gold is up over 10% in 2025, delivering positive returns in every trading week of the year.
• The much-mooted revaluation of US Gold reserves touted by the US President’s team could actually be good for prices, according to BofA Head of Commodities Research (per BBG). 
• In a further bullish sign for gold yet another Central Bank has increased their gold purchases with data from Iran showing imports of 100 tonnes during their financial year, up from 30 tonnes prior (according IRNA).