JGBS: Futures Richer & At Session Highs, Retail Sales & IP Data Tomorrow
JGB futures are richer and at session highs, +28 compared to the settlement levels.
- There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined BoJ Opinion Summary for the December MPM. November Housing Starts are due later today.
- Cash US tsys are dealing 1-2bps richer across the major benchmarks in muted Asia-Pac dealing.
- Cash JGBs are richer across benchmarks, with yields -0.3bp (1-year) to -2.7bps (7-year). The benchmark 10-year yield is 2.0bps lower at 0.615% versus the recent low of 0.555% (20 Dec).
- Swaps are richer across maturities, with rates 1.5bp to 2.9bps lower. Swap spreads are tighter.
- Tomorrow, the local calendar sees November Retail Sales, Industrial Production (flash reading) and Weekly International Investment Flows.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS: Marginally Cheaper, Ranges Narrow In Asia
TYZ3 deals at 108-08+, -0-03, a 0-07+ range has been observed on volume of ~195k.
- Cash tsys sit 2-3bps cheaper across the major benchmarks, the belly is marginally leading the cheaps.
- Tsys ticked lower in early trade, there was no overt macro driver as perhaps the possibility of an extended truce between Hamas and Israel weighed.
- Support was seen as WTI ticked away from session highs and tsys recovered to hold cheaper dealing in a narrow range for the most part. WTI sits ~1% lower.
- There is a thin docket in Europe today, further out we have New Home Sales, Dallas Fed Mfg Activity and latest 2- and 5-Year supply.
EQUITIES: Sentiment Softens, China Property Losses Weigh
Regional equity sentiment has generally deteriorated as Monday's Asia session has progressed. Hong Kong and China related bourses have been the weakest performers, further unwinding some of the recent gains seen. US equity futures are mostly lower. Eminis sit near session lows, off around 0.30%, last at 4555. Nasdaq futures are down more, off 0.45%. US yields are higher across the curve, ahead of key US data this week, including PCE figures. This may be tempering US futures sentiment at the margin.
- For China/HK stocks renewed weakness in property stocks is evident. The CSI 300 real estate index is off 3.0% at the break, the headline CSI 300 is down 1.2%, and back sub 3500 in index terms. For HK, the HSI is down nearly 1% at the break.
- Earlier we had headlines from the PBoC pledging financial support for the private sector. The central bank stated it will encourage banks not to cut loans for private companies that are facing temporary difficulties. This may be weighing on broader sentiment, with the financials index down 1.63%.
- China industrial profits were +2.7% y/y in Oct, positive but well off recent highs (17.2% in August). China President XI is scheduled to visit Shanghai tomorrow, including the futures exchange.
- Elsewhere, Japan markets are off 0.35% for the Topix, -0.50% for the Nikkei. The yen is firmer, +0.35% and back sub 149.00, which may be weighing.
- The Kospi is -0.15%, unwinding earlier gains. The Taiex is down nearly 0.50%.
- In SEA, most markets are weaker, but the JCI in Indonesia and the Philippines bourse are higher.
BONDS: Tick Lower Through Monday's Session
NZGBs have ticked lower through Monday's session however ranges remained narrow in the space, and sit 1-3 bps cheaper across the major benchmarks. Light bear steepening has been observed.
- Pressure was seen on the space as regional equities ticked lower alongside US equity futures and the USD firmed as the PBoC vowed to boost bond issuance by private firms, and also support M&A's, IPOs of private sector firms.
- 10 Year NZ US swaps spreads remain stable and sit at +52bps.
- With Wednesday's RBNZ meeting in view OIS price no change in the OCR with ~40bps of cuts by October 2024.
- PM Luxon noted that he is concerned at the risk of recent fiscal deterioration.
- Looking ahead, the data docket is empty tomorrow. The aforementioned RBNZ meeting is the next event of note in NZ.
