JGBS: 20Y Leads Rally, Ueda: BoJ To Assess JGB Tapering Program
JGB futures are stronger, +12 compared to settlement levels.
- The 2-year bond auction showed mixed results today. The low price came in above expectations and an increase in the cover ratio. The auction tail, however, widened slightly compared to last month.
- (MNI) The BoJ is closely monitoring developments in the JGB market, including its overall functioning, amid growing concerns over worsening supply-demand dynamics, Governor Kazuo Ueda told lawmakers Friday. The BoJ will conduct an interim assessment of its JGB tapering program at the June 16-17 policy meeting based on feedback from financial institutions and recent market conditions, he said.
- Cash US tsys are slightly mixed, with a flattening bias, in today's Asia-Pac session.
- Bloomberg - “President Trump just sent out a long social media post making it clear his commitment to tariffs is as strong as ever following a court ruling that deemed the levies were illegal.”
- Cash JGBs are 1-4bps richer across benchmarks, with the 20-year leading. The benchmark 2-year yield is 1.2bps lower at 0.746% after today's supply.
- Swap rates are 2-3bps higher. Swap spreads are wider.
- On Monday, the local calendar will see Capital Spending, Company Profits/ Sales and Jibun Bank PMI Mfg.
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GBPUSD TECHS: Bullish Trend Structure
- RES 4: 1.3605 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
- RES 3: 1.3550 High Feb 24 ‘22
- RES 2: 1.3510 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
- RES 1: 1.3444 High Apr 28 / 29
- PRICE: 1.3391 @ 06:10 BST Apr 30
- SUP 1: 1.3280 Low Apr 28
- SUP 2: 1.3202 20-day EMA
- SUP 3: 1.3041/3002 Low Apr 14 / 50-day EMA
- SUP 4: 1.2807 Low Apr 10
The trend condition in GBPUSD remains bullish and Monday’s fresh cycle high reinforces current conditions. The move higher highlights a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Moving average studies are in a bull-mode position too, signalling a dominant uptrend. Sights are on 1.3510, a Fibonacci projection. Support to watch lies at 1.3202, the 20-day EMA.
BOBL TECHS: (M5) Trading Closer To Its Recent Highs
- RES 4: 120.20 High Dec 12 ‘24 (cont)
- RES 3: 120.000 Psychological round number
- RES 2: 119.960 High Apr 7 and the bull trigger
- RES 1: 119.780 High Apr 22
- PRICE: 119.400 @ 05:45 BST Apr 30
- SUP 1: 119.180 Low Apr 23
- SUP 2: 118.996 20-day EMA
- SUP 3: 118.060 Low Apr 10
- SUP 4: 117.680 Low Apr 9 and a key support
Bobl futures are trading closer to their recent highs and a bull cycle remains in play. The steep sell-off between Apr 7 - 9 is considered corrective. The early April rally resulted in a break of key resistance at 119.040, the Feb 28 high, strengthening bullish conditions. The focus is on the 120.000 handle next. Firm support lies at 117.680, the Apr 9 low. The 20-day EMA, an important short-term support, is at 118.996.
AUSSIE BONDS: Modestly Cheaper After CPI Beat, Chance 50bp Cut In May Gone
ACGBs (YM flat & XM +2.0) slightly mixed on the day but 1-4bps cheaper after today’s Q1 CPI data.
- Q1 headline and underlying inflation printed 0.1pp higher than expected but the trimmed mean at 2.9% y/y is below the top of the RBA’s 2-3% target band for the first time since Q4 2021.
- Cash US tsys are slightly mixed in today's Asia-Pac session.
- Cash ACGBs are flat to 2bps richer on the day, with the AU-US 10-year yield differential at flat.
- Swap rates are flat to 4bps lower, with the curve flatter.
- The bills strip has twist-flattened, with pricing -5 to +3.
- The data is close to the RBA’s expectations and at this stage consistent with inflation sustainably remaining within the band. Thus, another 25bp rate cut to 3.85% is likely on May 20, assuming that easing is consistent with the RBA’s updated outlook.
- RBA-dated OIS pricing is 2-5bps firmer across meetings after today’s data. A 50bp rate cut in May is given a 3% probability, with a cumulative 112bps of easing priced by year-end.
- Tomorrow, the local calendar will see CoreLogic Home Values, Trade Balance and Q1 Terms of Trade data.
- The AOFM plans to sell A$1200mn of the 2.75% 21 June 2035 bond on Friday.
