07 November 2013
Fixed Income Research
The Global Macro Pulse
Overnight Price Action*
Most equity markets are down in Asia today. S&P futures are off 0.2%, the
Nikkei has fallen 0.6%, the HSI is off 0.7%, Kospi is down 0.4%, and Shanghai
has fallen 0.2%. The US 10yr yield is down very slightly to 2.6366% after falling
2bps in New York trading.
AUDUSD stole the FX show, dropping from 0.9520 to a low of 0.9466 and
0.9474 at the time of writing in response to weaker-than-expected employment
data for October. Away from this G10 dollar-pairs have done little with
EURUSD sideways at 1.3522 and USDJPY down slightly to 98.61. Trading in
most EM Asia exchange rates have been similarly quiet and sideways.
USDINR has been the exception, rallying further to 62.6288, its highest level
since the end of September.
JGB yields are down across the curve with the 10y yield off 1.4bps to 0.596%
and the 20yr down 2bps to 1.481%. Most Asian rates curves have followed the
US with yields down 1 – 4bps. China has been the main exception. The 7-day
repo rate is up 7bps to 3.95% and swap rates are up 2 – 5bps in response to
the PBOC failing to do a reverse repo today. Indian yields have also risen
slightly in sympathy with the recent INR weakness.
(*) Prices are taken as of noon SGT.
What Happened Overnight
US to sell $10bn to $15bn in floating notes
The US Treasury Department said it will sell $10bn to $15bn of its first
floating-rate notes Jan. 29 and keep auctions unchanged in the current
quarter because of political wrangling over the budget. The floating-rate notes
will have a two-year maturity and be the Treasury’s first new security in 17
years, the department said in its quarterly refunding announcement.
Australia’s employment surprised weak
Australia’s employment rose by a marginal 1.1K in October, against
consensus for 10K gain, and September’s increase was revised lower to 3.3K
from 9.1K. The bulk of the weakness was in full time employment, which
dropped 27.9K in October, while part time employment rose 28.9K. The
unemployment rate matched market expectations at 5.7%, unchanged from
the revised rate in September.
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