US TSYS: Yields Cheapen, Belly Underperforming Early

Q4 labour market data are released on February 5 and Bloomberg consensus expectations are in line with the RBNZ’s November forecasts. The unemployment rate is projected to rise 0.3pp to 5.1%, employment fall 0.2% q/q and private wages rise 0.6% q/q. An outcome close to this is unlikely to derail another 50bp of easing on February 19. It would have to print significantly better than expected for a smaller move and given the weakness of activity that seems unlikely. 

• Unemployment rate forecasts are between 4.9% and 5.3% with the RBNZ expecting 5.1%. The major local banks are all at 5.1% except for Westpac at 5.0%.
• Employment projections are between +0.1% q/q and -0.2% q/q with only three out of 15 analysts expecting it not to fall on the quarter. It is widely forecast to fall around 0.9% y/y. The RBNZ was slightly weaker in November projecting -0.3% q/q and -1.0% y/y. Jobs fell 0.5% q/q & 0.4% y/y in Q3.
• Private wages growth is expected to rise 0.6% q/q again with forecasts between 0.4% and 0.8%. The RBNZ is slightly lower at 0.5% as are ASB and ANZ. Kiwibank and Westpac are in line with consensus while BNZ is higher projecting 0.7%.

As markets slowly return from LNY, Trump Tariff headlines have equity markets worried, the tech heavy markets of South Korea & Taiwan saw large outflows on Monday, with Taiwan seeing over $2b leave the market, the largest outflow since Sept 2024.

• South Korea: Recorded outflows of -$663m yesterday, contributing to a 5-day total of -$1.45b. YTD flows are negative at -$1.67b. The 5-day average is -$290m, worse than the 20-day average of -$79m and the 100-day average of -$157m.
• Taiwan: Posted heavy outflows of -$2.04b yesterday, leading to a 5-day total of -$771m. YTD flows remain negative at -$3.30b. The 5-day average is -$154m, better than the 20-day average of -$194m but worse than the 100-day average of -$128m.
• India: Recorded flat flows on Friday and has a 5-day total of -$1.27b. YTD outflows are substantial at -$8.42b. The 5-day average is -$254m, better than the 20-day average of -$410m but worse than the 100-day average of -$155m.
• Indonesia: Posted -$17m in outflows yesterday, bringing the 5-day total to -$57m. YTD flows are negative at -$246m. The 5-day average is -$11m, close to the 20-day average of -$12m and the 100-day average of -$10m.
• Thailand: Saw -$11m in outflows yesterday, contributing to a 5-day total of -$65m. YTD flows are negative at -$341m. The 5-day average is -$13m, better than the 20-day average of -$17m and the 100-day average of -$15m.
• Malaysia: Registered -$34m in outflows yesterday, leading to a 5-day total of -$217m. YTD flows are negative at -$736m. The 5-day average is -$43m, worse than the 20-day average of -$36m and the 100-day average of -$26m.
• Philippines: Recorded +$12m in inflows yesterday, bringing the 5-day total to +$13m. YTD flows remain negative at -$102m. The 5-day average is +$3m, better than the 20-day average of -$5m and the 100-day average of -$2m.

Table 1: EM Asia Equity Flows

In Tokyo morning trade, JGB futures gapped lower, -14 compared to settlement levels.

• BoJ's Ueda is scheduled to appear in parliament on Tuesday morning.
• Japan’s monetary base fell 2.5 per cent in January from a year ago.
• Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s modest sell-off following news that President Trump agreed to delay a 25% tariff on Mexico and Canada.
• Cash JGBs are flat to 2bps cheaper across benchmarks, with a steepening bias. The benchmark 10-year yield is 1bp higher at 1.262% after setting a fresh cycle high of 1.268% today ahead of today’s supply.
• Swap rates are 1-2bps higher. Swap spreads are mostly wider.