Antipodean Capital Macro Strategy Daily Feb 7 - The NZ U/E rate cycle has bottomed, and the AU U/E base is not far away. The RBA & RBNZ will both be cutting by year end. Stay long yields/flatteners, short AUD & NZD. Wait to sell ASX.

Macro: RBA/RBNZ: Well, it took a while, but central banks are coming around to our view of the AU & NZ macro economies, and what that outlook means for cash rates, FX rates and yields in both nations. If the AU & NZ ec0on0omies unfold as we expect, and weaken further, then the RBA outlined that doing so would warrant rate cuts. The key will be rising unemployment rates, which we expect to now unfold in H1. In NZ, unemployment rates are now rising, and 3.9% looks like the cycle unemployment rate low. Today’s 4.3% data will encourage the RBNZ to shift towards more dovish stance on rates, realising they need to cut them. AUD, NZD and both nations yields, have a lot further to fall yet.

Summary: Markets did little overnight, with stocks trading narrow ranges. The main action and our focus in recent days has been in AU & NZ, where the RBA yesterday shifted focus from a mild hawkish bias on rates to neutrality. If the AU economy performs as we expect, the RBA will be easing by year end. In NZ a similar story applies, with a 0.4% rise in unemployment today signalling the NZ jobs cycle is now weakening. Beware.

New trades: Sold AUD at .7170 risk .72 target sub .70.
FX: None.
BONDS: Long 2 units ASX Banks 5yr CDS at 54bps, target 140. Long NZ 10s sold NZ 2s at 104bps risk 130bps target 50bps. Sold Portugal 10yr bought German Bund at 158bps, risk 110bps target 350bps.
EQUITIES: Long ASX All Ordinaries Top 100, Short ASX Small Ordinaries at 0.81x ratio.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65