JGBS: Bull-Flattener Partially Reverses Some Of This Week's Carnage
JGB futures are stronger and at Tokyo session highs, +22 compared to settlement levels.
- Outside of the previously outlined National CPI, there haven't been many by way of domestic drivers to flag.
- “US President Donald Trump initiated a phone call with Japanese Prime Minister Shigeru Ishiba to discuss tariffs in general terms. The two leaders discussed various topics, including tariff negotiations, economic security cooperation, and national security.” (per BBG)
- " Workers at companies affiliated with the Japan Business Federation won pay hikes exceeding 5% for a second consecutive year, which will help to keep a floor under domestic inflation"(BBG)
- Cash US tsys are slightly richer in today's Asia-Pac session after yesterday's rally. A light US calendar tonight with New Home Sales and Kansas City Fed Services Activity data due. The US markets will be closed for Memorial Day on Monday.
- Cash JGBs have bull-flattened, with yields 1-6bps lower. The benchmark 30-year yield is 4.5bps lower (2bps lower in the last 10mins) at 3.135% versus the high of 3.204% set this week.
- Swap rates are little changed out to the 7-year range but 1-3bps lower beyond. Swap spreads are mixed.
- On Monday, the local calendar will see Coincident/Leading Index data alongside an Auction for Enhanced-Liquidity 5-15.5 YR.
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BOBL TECHS: (M5) Bullish Outlook
- RES 4: 120.20 High Dec 12 ‘24 (cont)
- RES 3: 120.000 Psychological round number
- RES 2: 119.960 High Apr 7 and the bull trigger
- RES 1: 119.780 High Apr 22
- PRICE: 119.630 @ 05:55 BST Apr 23
- SUP 1: 119.030 Low Apr 17
- SUP 2: 118.703 20-day EMA
- SUP 3: 118.060 Low Apr 10
- SUP 4: 117.680 Low Apr 9 and a key support
Bobl futures are holding on to their latest highs. Recent weakness appears corrective and a bullish theme remains intact. The early April rally resulted in a break of key resistance at 119.040, the Feb 28 high. This strengthens bullish conditions. The focus is on the 120.000 handle next. Firm support lies at 117.680, the Apr 9 low. The 20-day EMA, an important short-term support, is at 118.703.
AUSSIE BONDS: Twist-Flattener, IMF Panel Discussion For RBA Gov
ACGBs (YM -6.0 & XM +1.5) are dealing mixed on a data light Sydney session, with the short-end under pressure as markets re-assess tariff-tied risks to global trade and the Trump Admin's efforts to meddling with the Federal Reserve's independent policy making.
- Risk-on sentiment extended into today's Asia-Pacific session after US President Trump stated that he had no intention of firing Fed Chair Powell.
- Trump also stated that the final tariff number for China wouldn't be near the current 145%.
- Cash US tsys have twist-flattened in today's Asia-Pac session, with yields 2bps higher to 8bps lower.
- Cash ACGBs are 5bps cheaper to 1bp richer with the AU-US 10-year yield differential at -10bps.
- Today’s auction of the Apr-29 bond saw the weighted average yield settle 0.88bps below the prevailing mid-yield. However, the cover ratio declined dramatically to 3.2200x from 4.2143x at the previous auction.
- Swap rates are flat to 5bps higher, with the 3s10s curve flatter.
- The bills strip is cheaper with pricing -4 to -9.
- RBA-dated OIS pricing is 2-11bps firmer across meetings today. A 50bp rate cut in May is given a 13% probability, with a cumulative 114bps of easing priced by year-end.
- Tomorrow morning, RBA Governor Bullock will participate in a panel discussion at the IMF Spring Meetings.
EURUSD TECHS: Corrective Pullback
- RES 4: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1608 High Nov 9 2021
- RES 1: 1.1573 High Apr 21
- PRICE: 1.1389 @ 06:05 BST Apr 23
- SUP 1: 1.1308 Intraday low
- SUP 2: 1.1167 20-day EMA and a key support
- SUP 3: 1.0919 50-day EMA and a short-term pivot level
- SUP 4: 1.0805 Low Apr 3
The trend in EURUSD remains bullish and the pullback from Monday’s cycle high is considered corrective. A bullish price sequence of higher highs and higher lows remains intact and note that moving average studies are in a bull-mode position too, signalling a continued dominant uptrend. The focus is on 1.1608 next, the Nov 9 2021 high. Key support is unchanged at the 20-day EMA, at 1.1167.
