BONDS: NZGBS: Richer In A Data-Light Session, Local Calendar Empty Again Tomorrow
NZGBs closed with a twist-flattening of the 2/10 curve. Benchmark yields were 1bp higher to 6bps lower. With the local calendar empty today, domestic participants have likely used US tsy dealings in today’s Asia-Pac session for directional guidance.
- As a reminder, the local market was closed Monday and Tuesday this week for the Christmas holiday period.
- Cash US tsys are dealing flat to 3bps richer across the major benchmarks, with a flattening bias, in muted Asia-Pac dealing.
- Swap rates closed 5-8bps lower, with the 2s10s curve flatter.
- RBNZ dated OIS pricing closed flat to 2bps softer across meetings.
- (Bloomberg) The RBNZ was unable to publish some data to its website at 3 pm local due to technical difficulties, according to an emailed statement. It will publish data, including Exchange Rates and TWI, as soon as the issue is resolved.
- Tomorrow, the local calendar is empty again.
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JGBS: Futures Down, But Up From Session Lows, Ueda Due In Parliament Later
At the lunch break, JGB futures sit just above session lows (145.53), last 145.60, -.06.
- This broadly matches the US Tsy future trajectory, which are also up from session lows (last 108-09+).
- Some marginal support may be coming through from lower US equity futures and a softer oil price backdrop.
- In the cash JGB space, yields sit marginally higher. The 10yr is a touch above 0.78%. Firmer yield gains are evident across the 20-40yr tenors. The 20yr back above 1.51%. The 10 swap rate is back above 0.99%. But like the JGB space, the back end of the curve is seeing slightly strong yield gains.
- Still to come is BoJ Governor Ueda before parliament.
AUD: AUDUSD Tests But Doesn’t Break 66c, Down Against Crosses
The USD index is down marginally and broke through Friday’s lows as UST yields came off session highs. This may have boosted AUDUSD with the pair rising to 0.6595. It is currently around 0.6585. It reached a low early in the session of 0.6575.
- Aussie is down against the yen and kiwi with AUDJPY -0.2% to 98.22 and AUDNZD -0.2% to 1.0825. AUDEUR is flat at 0.6018, off the intraday low of 0.6008, but AUDGBP is +0.1% to 0.5226.
- Equity markets across APAC are mixed with the KOSPI +0.5% but Nikkei -0.1%, ASX -0.2% and CSI 300 -0.8%. The S&P e-mini is down 0.2%. Oil prices are 0.4% lower with WTI around $75.270/bbl. Copper is down 0.1% and iron ore is $132-133/t.
- Later US new home sales and Dallas Fed index are released. ECB President Lagarde makes introductory comments at the European Parliament. Tomorrow RBA’s Bullock participates in a panel and October retail sales are released.
USD: USD Down Through Friday Lows, Gold Spikes
The BBDXY has broken through Friday lows, last near 1238.30. We are still above Tuesday lows from last week near 1236, but comfortably below the simple 200-day MA (1241.37).
- The market appears happy to fade USD upticks. USD/JPY is down around 0.20%, last near 149.10. NZD/USD is up 0.20%, briefly getting above 0.6090, but didn't have any follow through. AUD/USD is only up modestly, last near 0.6590.
- The direct catalyst for fresh USD weakness doesn't appear apparent. Gold has spiked higher in recent dealings, getting to fresh highs above $2018. This is through previous highs in the past month. This may have spilled over into weaker USD sentiment.
- US yields have ticked away from earlier highs (albeit still up for the session, 10yr yield last near 4.50%). US equity futures are down, Eminis last -0.20%. Regional equities are mixed at this stage.
