CHINA: Bond Futures Lower for the Week as OMO Withdraws Liquidity

• Another day of gains for China bond futures sees the 2-Yr above a key tech level for the first time since early November.  
• The 2-Yr bond future is up +0.03 at 102.45, breaking above the 100-day EMA of 102.420.
• The 10-Yr is up for a fourth consecutive day by +0.07 today, to reach 108.04 as it trades through the combined 20-day / 50-day EMA of 108.02.  Above is the 100-day EMA of 108.10.
• Cash is steady today with the CGB10-Yr at 1.83% and the 2-Yr at 1.39%

RBA-dated OIS pricing is 1–8bps firmer across meetings today, extending yesterday’s post-press conference sell-off.

• Relative to pre-RBNZ levels yesterday, pricing is now 5–13bps firmer, led by late-2026 meetings.
• Markets are pricing a steady build-up in tightening risk, with the implied probability of a 25bp hike rising from 38% in February to 102% by May and 205% by November 2026.
• The spread between the 1-year forward 3-month swap (1Y3M) and the 3-month rate—often used as a proxy for policy expectations a year ahead—has increased by more than 150bps since April, underscoring the magnitude of the shift in rate expectations.

Figure 1: 1Y3M Swap Rate Vs. 3M Swap Rate

Source: Bloomberg Finance LP / MNI

Ethereum had a range overnight of $3094.55 - $3397.82, Asia is trading around $3295, -0.20%. Ethereum rallied strongly in the New York session, price action for Crypto stood out as the USD is rallying at the same time as we approach the FOMC. Ethereum is still technically in a bear market and it will need a few more sessions like that to turn the trend around, though the price action is constructive. The sell-zone to potentially fade remains in the $3550-$3850 area, which could see sellers return initially. This resistance needs to hold to have another test back towards the lows again at some point.

• Andreas Steno Larsen on X: “I remain convinced that 2026 will bring a significant expansion in broad money. A shift is underway from the Fed toward “private channels”
• If he is correct that would set up the platform for Crypto recover and benefit from the increased liquidity.
• Hedgie on X: “Everyone's waiting for the Fed decision Wednesday, with 90% odds of a rate cut priced in. If Powell signals more easing ahead, Bitcoin might attempt $93,000-$95,000. A hawkish surprise could send it back toward $88,000 fast.”
• Ethereum’s Average True Range(ATR) for the last 10 Trading days: $171 

Fig 1: Ethereum spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P