JGBS: Bear-Steepener, BoJ Minutes (Mar) & 10Y Supply Tomorrow

ACGBs (YM +10.0 & XM +7.0) are richer but well below today's Asia-Pac session bests.

• Markets continue to be hit by the ongoing trade-related pullback in risk appetite, although some have begun to stabilise at lower levels. US equity futures are down sharply but also off their intraday lows.
• “Australian Treasurer Jim Chalmers blames "bad decisions" on tariffs for global stock market turmoil, despite his department forecasting minor impacts on domestic economic growth and inflation.” (per BBG)
• Cash US tsys are 3-15bps richer, led by the short end, in today's Asia-Pac session.
• Cash ACGBs are 7-10bps richer with the AU-US 10-year yield differential at +23bps.
• Bill strip pricing is +4 to +14, with whites leading.
• RBA-dated OIS pricing gives a 50bp rate cut in May a 55% probability, with a cumulative 119bps of easing priced by year-end (based on an effective cash rate of 4.09%). Earlier in the session, a 50bp rate cut in May was given an 80% probability, with a cumulative 133bps of easing priced by year-end.
• Tomorrow, the local calendar will see Consumer and Business Confidence data.
• The AOFM plans to sell A$400mn of the 4.25% 21 June 2034 bond tomorrow.

• RES 4: 5664.68 20-day EMA 
• RES 3: 5435.00 High Apr 4       
• RES 2: 5120.00 Low Aug 5 ‘24 (cont) 
• RES 1: 5007.00 Intraday high                            
• PRICE: 4929.75 @ 06:02 BST Apr 7   
• SUP 1: 4832.00 Intraday low                     
• SUP 2: 4760.88 1.618 proj of the Feb 19 - Mar 13 - 25 price swing 
• SUP 3: 4663.75 1.764 proj of the Feb 19 - Mar 13 - 25 price swing
• SUP 4: 4519.84 61.8% retracement of the Oc ‘22 - Feb ‘25 bull cycle   

S&P E-Minis continue to trade in a volatile manner and are once again lower, today. A bearish theme remains intact and the latest fresh cycle lows, strengthens current conditions. Scope is seen for an extension towards the 4800.00 handle next. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. Key short-term resistance has been defined at 5837.25, the Mar 25 high.

GBP/USD has historically traded very poorly in times of global distress. So it is very interesting to see it trading close to its highs of the year. An ugly reversal on Friday from a high above 1.3100 to close on a 1.2800 handle.

• The early morning selloff in Asia is beginning to stabilize, but going forward should risk extend lower as the market comes to terms with a potential global slowdown, can the GBP remain unscathed ?
• The CFTC accounts point to a leveraged market that is quite long GBP and the asset managers have pared back their short GBP to be almost flat.
• Since 2016 GBP has traded around 80/85% of the time in a 1.2000 - 1.3500 range.
• Should GBP fail to recapture 1.3000 and the USD once more take precedence, the pivotal 1.2750/1.2800 area will be keenly watched.
• A break of this support would see those fast money longs quickly get out and set up a move back to 1.2000 which would be more in line with how the GBP trades in this environment.

GBPUSD

Source: MNI - Market News/Bloomberg