JPY: Asia Wrap - USD/JPY Finds Demand, Still Trades In The Middle Of Its Range
The Asia-Pac USD/JPY range has been 144.23 - 144.99, Asia is currently trading around 144.95, +0.35% having found decent demand back towards the 144.20 area in our session. Price is now back in the middle of the wider 142.00 - 148.00 range and the pair will probably continue to take its cue from the US rates market which opened again this morning after the long weekend.
- MNI Brief: Japan’s May Negative Real Wage Widens. Japan’s inflation-adjusted real wages, a key gauge of household purchasing power, remained negative for the fifth straight month in May, falling 2.9% y/y following April’s 2.0% decline, preliminary data from the Ministry of /health, Labour and Welfare showed Monday. The drop marks the steepest decline since September 2023, when real wages also fell 2.9%.
- Bloomberg - “Japanese Prime Minister Shigeru Ishiba said the country is prepared for all possible tariff scenarios, speaking on Fuji TV’s “Sunday News The Prime” program. Japan is ready to “stand firm” and defend its interests while anticipating every possible situation, says Ishiba.”
- “We will be pushing for zero tariffs on automobiles," Ishiba adds. He notes that Japan is the largest investor in the US and the biggest job creator there.”
- "AOKI: JAPAN, US CONTINUING ACTIVE TARIFF DISCUSSIONS”- BBG
- The rejection of 148.00 points to a potential top being in place now and shows just how quick the market is to return to selling USD’s. USD/JPY was looking for a fresh catalyst to probe the lower end of its range again but NFP did not provide that so we are now back in the middle of the range. The JPY bulls will be hoping the move higher in US yields is capped as a break higher in rates would begin to make a long JPY market vulnerable with its preference to express a short.
- Options : Close significant option expiries for NY cut, based on DTCC data: 143.85($550m).Upcoming Close Strikes : 144.50($840m July9), 142.75(AUD$855m July8).
Fig 1 : USD/JPY Spot Hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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JGB TECHS: (M5) Rallies Off Lows
- RES 3: 147.74 - High Jan 15 and bull trigger (cont)
- RES 2: 146.53 - High Aug 6
- RES 1: 141.48/142.95 - High May 2 / High Apr 7
- PRICE: 139.19 @ 15:53 GMT Jun 06
- SUP 1: 138.54 - Low May 22
- SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
- SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg
JGBs have rallied off recent lows, however a bearish theme remains intact following the reversal that started Apr 7. A continuation lower would signal scope for an extension towards 136.57, a Fibonacci projection. On the upside, a reversal higher would instead refocus attention on 142.95, the Apr 7 high. The first important resistance to watch is 141.48, the May 2 high. A break of this level would be viewed as an early bullish signal.
US TSYS/SUPPLY: MNI UST Issuance Deep Dive: June 2025
We've just published our UST Issuance Deep Dive - Download Full Report Here
- May’s refunding round saw guidance as well as coupon sizes for the current quarter unchanged.
- The August round (Jul 28-30) could prove more compelling, reflecting both pressure at the long end of the Treasury curve as well as a shifting fiscal outlook amid tariff revenues contrasted with impending tax cuts (not to mention the likelihood of approaching the debt limit at around that time if it’s not lifted).
- Future Coupon Upsizing: We’ve seen some expectations that Treasury could lean against some of those trends in the August refunding, with potential signals if not immediate action on adjusting buybacks or even reducing issuance duration in order to reduce pressure on the long end. MNI’s current expectation is that coupon sizes will only be increased in early 2026. We will update in our next Deep Dive at end-June, with our full refunding preview coming in late July.
- Upcoming issuance: June is set to see $315B in nominal Treasury coupon sales, in addition to $23B in 10Y TIPS and $28B FRN for a total of $366B. Sales for the month start in the coming week, on Tuesday June 10 with $58B of 3Y Note, Wednesday June 11 with $39B of 10Y Note, and Thursday June 12 with $22B of 30Y Bond.
- May Auction Results: Against a backdrop of continued steepening pressure for global sovereign curves, May’s coupon auctions saw strong sales at the short-end/belly contrasted with tails at the long-end.
US FISCAL: Extraordinary Treasury Measures Tick Up As Cash Depletes
Treasury had $84B in "extraordinary measures" available to keep the government financed as of June 4 per a release Friday. That is up from $68B a week earlier though Treasury has exhausted three-quarters of the total initially available ($362B) when the debt limit impasse began in January.
- Combined with a pullback in Treasury cash ($376B), the total resources available to avert an "x-date" in the summer are down to a total $460B, the lowest since April 10 before the annual tax take accelerated.
- There will be another uptick in Treasury cash late next week/early the following week around the mid-June tax date, but this is likely to be the last major uplift before the summer at which point x-date speculation will pick up if Congress hasn't passed a debt limit increase by then.
