Markets Daily
US bond yields and the US dollar rebounded, helped by firm economic data. The Bank of England remained on hold, but the Swiss central bank delivered a surprise cut. AUD retreated to 0.6570, outperforming on crosses. Today’s calendar includes Japan February CPI and UK February retail sales.
Yesterday
Australia’s February labour force survey reported a much stronger-than-expected surge in employment, up +116.5k (+0.8%), and aggregate hours worked (+2.8%). The number of people unemployed declined (–52.0k), resulting in a sharp fall in the unemployment rate, from 4.1% to 3.7%. Following the bumper number for jobs growth, the employment-to-population ratio bounced back to 64.2%, broadly in line with October’s outcome. AUD/USD jumped in response, from 0.6590 to 0.6615, later extending to 0.6630. The Aussie’s upbeat mood was consistent with regional equities, most major indexes up 1% or more, the ASX 200 +1.1%.
Currencies/Macro
The US dollar rose against all majors. USD/JPY rose 40 pips to 151.65, about where it was pre-FOMC. EUR/USD fell from 1.0925 to 1.0860. EUR/CHF bounced from 0.9680 to 0.9780 in response to the Swiss rate cut, the franc weakest in the G10 on the day. GBP/USD fell 1.3 cents or -1.1% to 1.2650, with only a small immediate response to the Bank of England decision. The Aussie outperformed on crosses, following the broad USD trend to 0.6570, a modest -0.25% net. NZD fell -0.6% to 0.6040. AUD/NZD preserved its reaction to yesterday’s strong AU jobs data and extended its month-old uptrend from 1.0835 to 1.0877 – a four-month high.
The S&P Global flash March US manufacturing PMI rose to 52.5 (est. 51.8, prior 52.2), while services fell to 51.7 (est. 52.0, prior 52.3). The pricing components were notable: services prices paid/input prices rose to a high since Sep 2023, while manufacturing prices rose to a high since May 2022. The March Philadelphia Fed business survey was solid at +3.2 (est. -2.5, prior +5.2), with a rise in new orders. The Conference Board’s leading index delivered a positive reading for the first time since Feb 2022, +0.1% (est. -0.1%, prior -0.4%).
US weekly jobless claims continued to reflect a solid labour market. Initial claims were 210k (est. 213k, prior 212k revised from 209k), while continuing claims of 1.807m (est. 1.820m, prior 1.803m from 1.811m) showed no signs of labour shedding. Existing home sales in Feb rose 9.5% (est. -1.3%).
The S&P Global flash March Eurozone manufacturing PMI at 45.7 (est. 47.0) was dragged down by Germany and France, but services were solid at 51.1 (est. 50.5). Of comfort to the ECB were reported moderation in price and wage pressures.
The Bank of England left the policy rate on hold at 5.25%, as was universally expected, but without the previous hawkish dissent. The vote was 8-1, dissenter Dhingra preferring a rate cut. Developments were seen as moving as expected, but more information was needed to determine how long to remain restrictive. Governor Bailey said there was some way to go to cool inflationary pressures, but they were “on the way” to winning.
The Swiss National Bank surprised markets with a 25bp cut to 1.50%, and lowered its inflation forecast. The statement said that "the easing of monetary policy has been made possible because the fight against inflation over the past two and a half years has been effective."
Norway’s central bank, Norges Bank, left rates unchanged as was expected, but they signalled rate cuts would come later than previously expected.
Interest rates
The US 2yr treasury yield bounced off 4.55% to 4.64% (vs 4.67% pre-FOMC), while the 10yr yield rose from a low of 4.22% to 4.27%. Markets price the Fed funds rate, currently 5.375% (mid), to be unchanged at the next meeting on 2 May, with a 70% chance of a cut by June.
Australian 3yr government bond yields (futures) rose from 3.64% to 3.67%, while the 10yr yield rose from 4.08% to 4.12%. Markets currently price the RBA cash rate to be unchanged at the next meeting on 7 May, with a 90% chance of a cut by September.
New Zealand rates markets price the OCR, currently at 5.50%, to be unchanged at the next meeting on 10 April, with a 90% chance of cut by August.
Credit indices have seen a solid session post the roll with the new series of Main 2bp tighter to 53.5 and CDX half a bp better at 50.5 with US IG cash also recording gains of 1-3bp as it played catch up post the Fed, however primary activity has slowed into the raft of CB updates. Europe saw 5 issuers price EUR3.9bn, while the US saw 3 issuers emerge post the FOMC to price USD2.9bn (USD27.8bn wtd).
Commodities
Crude markets again edged lower with the stronger US$ capping prices. The May WTI contract is down 0.46% at $80.90 while the May Brent contract is down 0.46% at $85.61. Reuters reported that the world’s largest oil refinery owned by India’s Reliance Industries is refusing to take delivery of Russian oil loaded on tankers operated by the shipper Sovcomflot after recent US sanctions. The piece also reported that other Indian refiners plan to shun the use of Sovcomflot vessels. Bloomberg tanker tracking data has been reporting on two tankers carrying Russian flagship Urals crude which have been idling off the West Coast of India for more than three weeks. Bloomberg reported that Houthi rebels have told China and Russia their vessels can sail through the Red Sea and Gulf of Aden without being attacked.
In gas markets, construction of Germany’s first permanent LNG terminal is due to start within weeks after a final investment decision was made by Hanseatic Energy Hub GMBH. In the US, Freeport noted that the cost to develop new liquefaction plants has nearly doubled over the past 8 years while LNG prices under long term contracts have dropped, meaning “that some of the second wave of LNG terminals … will take longer, cost more and their margins are very poor”.
Metals managed to hang onto gains despite the strong US$ with copper up 0.4% to $8,963.5 while aluminium followed the recent breakout in copper up 1.58% at $2,309. That’s the first close above $2,300 for aluminium since January with the softer IAI production data helping sentiment driven by Chinese production -3.48%mm. Zinc also jumped 0.9% to $2,532 helped by news that Glencore was halting operations at its McArthur River zinc and lead mine in the NT following heavy rain from Tropical Cyclone Megan.
Iron ore markets continued the week-long recovery from sub $100 on signs that the sell off may have gone too far. The April SGX contract is up $1.85 from the same time yesterday at $108.50 while the 62% Mysteel index is up $4 at $110.65. China will report industrial profits for February on Wednesday next week and PMIs will be released over the Easter weekend.
Day ahead
The RBA Financial Stability Review will provide a comprehensive update on financial system conditions and risks.
Japan: Taking the cue from the Tokyo CPI, base effects are set to drive a misleading lift in the CPI in February (market f/c: 2.9%yr).
Germany/UK: The German IFO business climate survey will likely a lingering uncertainty around the economic outlook in March (market f/c: 85.9). In the UK, the GfK consumer sentiment survey should continue to highlight the impact of restrictive policy on households (market f/c: –19), acting as a drag on retail sales growth (market f/c: –0.4%).
FOMC Chair Powell is due to speak at a Fed Listens event. The FOMC’s Barr and Bostic are also due to speak at different events.
Stay informed with Westpac IQ
Get the latest reports straight to your inbox.
Related articles
Aussie bulls press the advantage
Browse topics
Disclaimer
©2025 Westpac Banking Corporation ABN 33 007 457 141 (including where acting under any of its Westpac, St George, Bank of Melbourne or BankSA brands, collectively, “Westpac”). References to the “Westpac Group” are to Westpac and its subsidiaries and includes the directors, employees and representatives of Westpac and its subsidiaries.
Things you should know
We respect your privacy: You can view our privacy statement at Westpac.com.au. Each time someone visits our site, data is captured so that we can accurately evaluate the quality of our content and make improvements for you. We may at times use technology to capture data about you to help us to better understand you and your needs, including potentially for the purposes of assessing your individual reading habits and interests to allow us to provide suggestions regarding other reading material which may be suitable for you.
This information, unless specifically indicated otherwise, is under copyright of the Westpac Group. None of the material, nor its contents, nor any copy of it, may be altered in any way, transmitted to, copied of distributed to any other party without the prior written permission of the Westpac Group.
Disclaimer
This information has been prepared by the Westpac and is intended for information purposes only. It is not intended to reflect any recommendation or financial advice and investment decisions should not be based on it. This information does not constitute an offer, a solicitation of an offer, or an inducement to subscribe for, purchase or sell any financial instrument or to enter into a legally binding contract. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice. Certain types of transactions, including those involving futures, options and high yield securities give rise to substantial risk and are not suitable for all investors. We recommend that you seek your own independent legal or financial advice before proceeding with any investment decision. This information may contain material provided by third parties. While such material is published with the necessary permission none of Westpac or its related entities accepts any responsibility for the accuracy or completeness of any such material. Although we have made every effort to ensure this information is free from error, none of Westpac or its related entities warrants the accuracy, adequacy or completeness of this information, or otherwise endorses it in any way. Except where contrary to law, Westpac Group intend by this notice to exclude liability for this information. This information is subject to change without notice and none of Westpac or its related entities is under any obligation to update this information or correct any inaccuracy which may become apparent at a later date. This information may contain or incorporate by reference forward-looking statements. The words “believe”, “anticipate”, “expect”, “intend”, “plan”, “predict”, “continue”, “assume”, “positioned”, “may”, “will”, “should”, “shall”, “risk” and other similar expressions that are predictions of or indicate future events and future trends identify forward-looking statements. These forward-looking statements include all matters that are not historical facts. Past performance is not a reliable indicator of future performance, nor are forecasts of future performance. Whilst every effort has been taken to ensure that the assumptions on which any forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from any forecasts.
Conflicts of Interest: In the normal course of offering banking products and services to its clients, the Westpac Group may act in several capacities (including issuer, market maker, underwriter, distributor, swap counterparty and calculation agent) simultaneously with respect to a financial instrument, giving rise to potential conflicts of interest which may impact the performance of a financial instrument. The Westpac Group may at any time transact or hold a position (including hedging and trading positions) for its own account or the account of a client in any financial instrument which may impact the performance of that financial instrument.
Author(s) disclaimer and declaration: The author(s) confirms that (a) no part of his/her compensation was, is, or will be, directly or indirectly, related to any views or (if applicable) recommendations expressed in this material; (b) this material accurately reflects his/her personal views about the financial products, companies or issuers (if applicable) and is based on sources reasonably believed to be reliable and accurate; (c) to the best of the author’s knowledge, they are not in receipt of inside information and this material does not contain inside information; and (d) no other part of the Westpac Group has made any attempt to influence this material.
Further important information regarding sustainability-related content: This material may contain statements relating to environmental, social and governance (ESG) topics. These are subject to known and unknown risks, and there are significant uncertainties, limitations, risks and assumptions in the metrics, modelling, data, scenarios, reporting and analysis on which the statements rely. In particular, these areas are rapidly evolving and maturing, and there are variations in approaches and common standards and practice, as well as uncertainty around future related policy and legislation. Some material may include information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. There is a risk that the analysis, estimates, judgements, assumptions, views, models, scenarios or projections used may turn out to be incorrect. These risks may cause actual outcomes to differ materially from those expressed or implied. The ESG-related statements in this material do not constitute advice, nor are they guarantees or predictions of future performance, and Westpac gives no representation, warranty or assurance (including as to the quality, accuracy or completeness of the statements). You should seek your own independent advice.
Additional country disclosures:
Australia: Westpac holds an Australian Financial Services Licence (No. 233714). You can access Westpac’s Financial Services Guide here or request a copy from your Westpac point of contact. To the extent that this information contains any general advice, it has been prepared without taking into account your objectives, financial situation or needs and before acting on it you should consider the appropriateness of the advice.
New Zealand: In New Zealand, Westpac Institutional Bank refers to the brand under which products and services are provided by either Westpac (NZ division) or Westpac New Zealand Limited (company number 1763882), the New Zealand incorporated subsidiary of Westpac ("WNZL"). Any product or service made available by WNZL does not represent an offer from Westpac or any of its subsidiaries (other than WNZL). Neither Westpac nor its other subsidiaries guarantee or otherwise support the performance of WNZL in respect of any such product. WNZL is not an authorised deposit-taking institution for the purposes of Australian prudential standards. The current disclosure statements for the New Zealand branch of Westpac and WNZL can be obtained at the internet address www.westpac.co.nz .
Singapore: This material has been prepared and issued for distribution in Singapore to institutional investors, accredited investors and expert investors (as defined in the applicable Singapore laws and regulations) only. Recipients of this material in Singapore should contact Westpac Singapore Branch in respect of any matters arising from, or in connection with, this material. Westpac Singapore Branch holds a wholesale banking licence and is subject to supervision by the Monetary Authority of Singapore.
U.S.: Westpac operates in the United States of America as a federally licensed branch, regulated by the Office of the Comptroller of the Currency. Westpac is also registered with the US Commodity Futures Trading Commission (“CFTC”) as a Swap Dealer, but is neither registered as, or affiliated with, a Futures Commission Merchant registered with the US CFTC. The services and products referenced above are not insured by the Federal Deposit Insurance Corporation (“FDIC”). Westpac Capital Markets, LLC (‘WCM’), a wholly-owned subsidiary of Westpac, is a broker-dealer registered under the U.S. Securities Exchange Act of 1934 (‘the Exchange Act’) and member of the Financial Industry Regulatory Authority (‘FINRA’). In accordance with APRA's Prudential Standard 222 'Association with Related Entities', Westpac does not stand behind WCM other than as provided for in certain legal agreements between Westpac and WCM andobligations of WCM do not represent liabilities of Westpac. This communication is provided for distribution to U.S. institutional investors in reliance on the exemption from registration provided by Rule 15a-6 under the Exchange Act and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors in the United States. WCM is the U.S. distributor of this communication and accepts responsibility for the contents of this communication. Transactions by U.S. customers of any securities referenced herein should be effected through WCM. All disclaimers set out with respect to Westpac apply equally to WCM. If you would like to speak to someone regarding any security mentioned herein, please contact WCM on +1 212 389 1269. Investing in any non-U.S. securities or related financial instruments mentioned in this communication may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the SEC in the United States. Information on such non-U.S. securities or related financial instruments may be limited. Non-U.S. companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect in the United States. The value of any investment or income from any securities or related derivative instruments denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related derivative instruments.
The author of this communication is employed by Westpac and is not registered or qualified as a research analyst, representative, or associated person of WCM or any other U.S. broker-dealer under the rules of FINRA, any other U.S. self-regulatory organisation, or the laws, rules or regulations of any State. Unless otherwise specifically stated, the views expressed herein are solely those of the author and may differ from the information, views or analysis expressed by Westpac and/or its affiliates.
UK and EU: The London branch of Westpac is authorised in the United Kingdom by the Prudential Regulation Authority (PRA) and is subject to regulation by the Financial Conduct Authority (FCA) and limited regulation by the PRA (Financial Services Register number: 124586). The London branch of Westpac is registered at Companies House as a branch established in the United Kingdom (Branch No. BR000106). Details about the extent of the regulation of Westpac’s London branch by the PRA are available from us on request.
Westpac Europe GmbH (“WEG”) is authorised in Germany by the Federal Financial Supervision Authority (‘BaFin’) and subject to its regulation. WEG’s supervisory authorities are BaFin and the German Federal Bank (‘Deutsche Bundesbank’). WEG is registered with the commercial register (‘Handelsregister’) of the local court of Frankfurt am Main under registration number HRB 118483. In accordance with APRA’s Prudential Standard 222 ‘Association with Related Entities’, Westpac does not stand behind WEG other than as provided for in certain legal agreements (a risk transfer, sub-participation and collateral agreement) between Westpac and WEG and obligations of WEG do not represent liabilities of Westpac.
This communication is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. This communication is not being made to or distributed to, and must not be passed on to, the general public in the United Kingdom. Rather, this communication is being made only to and is directed at (a) those persons falling within the definition of Investment Professionals (set out in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”)); (b) those persons falling within the definition of high net worth companies, unincorporated associations etc. (set out in Article 49(2)of the Order; (c) other persons to whom it may lawfully be communicated in accordance with the Order or (d) any persons to whom it may otherwise lawfully be made (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this communication or any of its contents. In the same way, the information contained in this communication is intended for “eligible counterparties” and “professional clients” as defined by the rules of the Financial Conduct Authority and is not intended for “retail clients”. Westpac expressly prohibits you from passing on the information in this communication to any third party.
This communication contains general commentary, research, and market colour. The communication does not constitute investment advice. The material may contain an ‘investment recommendation’ and/or ‘information recommending or suggesting an investment’, both as defined in Regulation (EU) No 596/2014 (including as applicable in the United Kingdom) (“MAR”). In accordance with the relevant provisions of MAR, reasonable care has been taken to ensure that the material has been objectively presented and that interests or conflicts of interest of the sender concerning the financial instruments to which that information relates have been disclosed.
Investment recommendations must be read alongside the specific disclosure which accompanies them and the general disclosure which can be found here. Such disclosure fulfils certain additional information requirements of MAR and associated delegated legislation and by accepting this communication you acknowledge that you are aware of the existence of such additional disclosure and its contents.
To the extent this communication comprises an investment recommendation it is classified as non-independent research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and therefore constitutes a marketing communication. Further, this communication is not subject to any prohibition on dealing ahead of the dissemination of investment research.