CHINA: Bond Futures Down – Weakening Trend Remains.
Feb-27 01:56
- Despite two days of gains, China’s bond futures turned down again today.
- China’s 10YR bond future is down by -0.07 at 108.13, above the 100-day EMA of 108.02.
- With both the 20-day EMA trend and the 50-day EMA trend turning down, the weakening trend remains in place.
- China’s 2YR bond future is down by -0.02 at 102.56, below the 200-day EMA of 102.63 with both the 20-day EMA trend and the 50-day EMA trend turning down.
- Government bonds are quiet today with the 10YR modestly higher in yield at 1.77%.
- China releases the Official PMIs on the 1st which are forecast to see a modest pick up from January’s result.
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FOREX: USD Index Off Highs, Yen Giving Back Some Of Monday's Outperformance
Jan-28 01:39
The USD remains on the front foot, albeit off highs, the BBDXY index last near 1300 (earlier highs were at 1301.4). We are still up around 0.25% versus Monday levels.
- Earlier remarks from US President Trump around tariffs in the near future, along with other headlines that incoming Treasury Secretary Bessent favors universal tariffs (per BBG), has provided broad USD support. Tariff headlines/risks continue to be a key driver of FX sentiment.
- After outperforming yesterday, USD/JPY is up nearly 0.60%, last near 155.35/40. This puts us back above the 50-day EMA (in the low 155.00 region).
- US yields are up, with gains a little over 1bps across the Tsy benchmarks. US equity futures are holding positive, despite the tariff headlines, but this follows yesterday's sharp sell off in cash markets. Most regional equity markets (which aren't shut for LNY), are tracking lower in line with US losses on Monday.
- AUD/USD is down 0.35% to 0.6270, while NZD is off slightly more to 0.5665/70. Both sit up from session lows. USD/CNH is up +0.20%, albeit off session highs, last near 7.2675/80. China markets are out from today for the LNY break (back next Wednesday), so there is no onshore anchor point.
- We only have Japan machine tool orders out later, otherwise the Asia Pac calendar is very light, with several markets closed for LNY (along with China).
JGBS: Cash Bond Bull-Steepener, PPI Services Lower Than Expected
Jan-28 01:35
In Tokyo morning trade, JGB futures are holding stronger, +26 compared to settlement levels, but off session bests.
- A leading indicator of Japan's service-sector inflation hit 2.9% in December as prices rose for a broad range of services such as accommodation and transportation, data showed, keeping alive expectations of further interest rate hikes by the central bank. (RTRS)
- Service-sector inflation is being closely watched by the Bank of Japan for clues on whether prospects of sustained wage gains will prod firms to continue raising prices and keep inflation sustainably around its 2% target.
- Cash US tsys are ~1bp cheaper in today’s Asia-Pac session after yesterday’s strong rally.
- Cash JGBs are flat to 2bps richer across benchmarks, with a steepening bias. The benchmark 10-year yield is 1.2bps lower at 1.201% versus the cycle high of 1.262%.
- Swap rates are flat to 2bps higher with the long-end underperforming. Swap spreads are wider.
JGBS: Rinban Purchase Offer
Jan-28 01:12
The BoJ offers to buy a total of Y750bn of JGBs from the market:
- Y300bn worth of JGBs with 1-3 Years until maturity
- Y300bn worth of JGBs with 3-5 Years until maturity
- Y150bn worth of JGBs with 10-25 Years until maturity
