JGB TECHS: (U2) Cracks Support, Accelerates Losses
- RES 3: 151.13 - High Mar 3
- RES 2: 150.44 - High Mar 14
- RES 1: 150.14 - High Apr 1 and key resistance
- PRICE: 147.19 @ 15:38 BST Jun 14
- SUP 1: 147.15 - Low Jun 14
- SUP 2: 147.08 - 3.0% Lower Bollinger Band
- SUP 3: 146.82 - Low Jul 14 2015
JGBs extended weakness Tuesday, showing below a key technical support, marking the significance of this week’s volatility. JGB futures showed below the 1.0% 10-dma envelope for the first time since the depths of the COVID-19 crisis, touching 147.15 on the pull lower. Weakness is looking stretched at these levels, with the RSI spilling below 20. The next downside level crosses at 147.08, the 3.0% lower Bollinger Band ahead of 146.82 - the low from July 14th 2015.
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JGB TECHS: (M2) Trend Condition Remains Bearish
- RES 3: 151.13 - High Mar 3
- RES 2: 150.44 - High Mar 14
- RES 1: 150.14 - High Apr 1
- PRICE: 149.63 @ 16:32 BST May 13
- SUP 1: 148.72 - Low Mar 28
- SUP 2: 148.69 - 3.0% Lower Bollinger Band
- SUP 3: 148.01 - 1.0% 10-dma envelope
The primary downtrend in JGBs remains intact although the recent recovery has given bears pause for thought. Nonetheless, the trend breach the 61.8% Fib for the 2015 - 2020 rally at 149.65 continues to weigh on prices and spells further losses toward 148.69/148.01, which marks both the 3.0% Lower Bollinger Band as well as the 1.0% 10-dma envelope. Resistance is at 150.14, Apr 1 high.
AUSSIE BONDS: Light Bid For Futures At The Re-open
A very modest bid for Aussie bond futures to start the week, with YM unch. & XM +2.5.
- The positive Chinese news flow that we have outlined elsewhere i.e. cutting of interest rates for first time home buyers and confirmation that the gradual re-opening of Shanghai will start today, has dominated wider price action early this week, with U.S. Tsy futures marginally lower across the curve, while U.S. e-mini futures are better bid, rising by 0.3-0.7% as of typing.
- To recap, the Aussie bond futures curve actually managed to twist flatter during the final overnight session of last week, even as U.S. Tsys bear steepened, with YM closing at session lows while XM went out around the middle of its post-Sydney range.
- Monday’s domestic docket is non-existent, although Chinese monthly economic activity data and the latest round of PBoC MLF operations will provide some interest for participants.
EQUITIES: Goldman Mark S&P 500 Year-End Call Lower
Late on Friday Goldman Sachs noted that “although S&P 500 firms posted much better-than-expected Q1 EPS growth of 11%, investors have been mauled by a 18% near-bear market plunge since the index peaked on January 3rd. We boost our 2022 EPS growth forecast to +8% (from +5) and maintain our 2023 growth estimate of 6%. Our sales, margin, and EPS estimates remain below bottom-up consensus. We cut our year-end target to 4,300 (from 4,700) to reflect higher interest rates and slower economic growth than we previously assumed. Our new baseline forecast assumes no recession and implies the P/E ends the year unchanged at 17x. A recession would see the index fall by 11% to 3,600 as the P/E drops to 15x. Focus on high vs. low margin growth stocks.”
