US TSYS: Asia Wrap - Yields Edge Higher
Jul-24 04:07
The TYU5 range has been 110-30 to 111-02 during the Asia-Pacific session. It last changed hands at 110-31+, down 0-01 from the previous close.
- The US 2-year yield has edged higher trading around 3.886%, up 0.01 from its close.
- The US 10-year yield has moved higher trading around 4.392%, up 0.01 from its close.
- The 10-year yield has moved back towards its pivot within the wider range 4.10% - 4.65%, expect supply around 4.30/35% first up. A close back below 4.30% would begin to get the bulls excited once more and the chopfest within the range will continue.
- Wei Li(CIS BlackRock) on LinkedIn - “Credit is the dog that didn’t bark this year. It navigated wild swings in headlines and markets with a lot less vol - just a boring (boring is good!) carry story. In fact carry is back across FI: more than 80% of global FI yields >4%, compared to less than 20% (chart). Find quality carry - even US HY, its default is about half of long term average - and barbell with high conviction risky calls in equities.” See Graph Below.
- (Bloomberg) - Investors are pricing about 76 bps of Fed rate cuts in 2026 on growing speculation that Jerome Powell’s successor will deliver the easier monetary policy that Trump demands. Lutnick told Fox News rates need to be lower and called for the replacement of the Fed chair.
- Data/Events: Initial Jobless Claims, Chicago Fed Activity Index, S&P Global US PMI’s, Building Permits, New Home Sales, Kansas City Fed Manf. Activity.
Fig 1: Fixed Income Assets With Yields Above 4%
Source: MNI/BlackRock
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JGBS AUCTION: Mixed Demand Metrics For 20Y Auction
Jun-24 03:52
The 20-year JGB auction delivered mixed results across key metrics. The low price underperformed dealer forecasts, which were set at 100.50 according to a Bloomberg poll. However, the cover ratio increased to 3.1007x (highest since March) from 2.5007x in the previous auction, and the auction tail shortened dramatically to 0.28 from 1.14 – the longest since 1987.
- As noted in the auction preview, today’s offering featured an outright yield approximately 10bps below last month’s level and 25bps below the cycle high.
- However, the 10/20 yield curve remained near its recent high, its steepest since 1999.
- Overall, today’s result is likely to be seen as better than the performance observed in the 30-year JGB auction earlier this month.
- Post-auction, the 20-year JGB has cheapened 1bp.
JGBS AUCTION: 20-Year JGB Auction Results
Jun-24 03:44
The Japanese Ministry of Finance (MOF) sells Y 758.6bn 20-Year JGBs:
- Average Yield: 2.364% (prev. 2.453%)
- Average Price: 100.48 (prev. 99.29)
- High Yield: 2.385% (prev. 2.540%)
- Low price: 100.20 (prev. 98.15)
- % Allotted At High Yield: 20.7575% (prev. 80.8791%)
- Bid/Cover: 3.1007x (prev. 2.5007x)
CHINA: Bond Futures Lower as Equity Rallies
Jun-24 03:15
- A decent bounce in risk sentiment sees major bourses strong and bond futures lower.
- The 10YR is lower by -0.06 at 109.08 and remains above the 20-day EMA of 108.99
- The 2YR is lower by -0.01 at 102.51 and sits just above the 50-day EMA of 102.50
- The CGB10YR is at 1.64%
