US TSYS: Cash Bonds Little Changed After Yesterday's Tame CPI
May-14 04:19
TYM5 is dealing at 110-04, +0-05 from closing levels in today's Asia-Pac session.
- According to MNI’s technicals team, Treasury futures maintain a softer tone following recent weakness. Support at 110-01+, a Fibonacci retracement point, has been broken. Clearance here strengthens a bearish theme and exposes a key support at 109-08, the Apr 24 low. Key near-term resistance has been defined at 111-22, the May 7 high. A break of this level is required to signal a potential reversal.
- There has been no net movement in cash US tsys in today's Asia-Pac session after being little changed yesterday following the tame April CPI report.
- The 10-year yield range seems to be 4.10% - 4.50%, with the yield currently testing the upper bound of this range. A sustained break above this level would see another round of selling targeting the 4.75% area.
- Data: US MBA Mortgage Applications
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US TSYS: Richer After Last Week's Sell-Off
Apr-14 04:06
TYM5 has traded in a tight 109-17/109-31 range, going into the London open trading near its highs around 109-31,+0-07+ from its close on Friday.
- The 10-year yield has consolidated in a tight range of 4.4561 - 4.4876 in Asia.
- The market is starting to realise the FED will not be stepping in to rescue it by cutting rates, as long as it expects inflation to track higher on the back of Trump’s policies.
- This will be a big week for US tsys but it feels there has been some trust lost and there is more position unwind to come. Dips back towards 4.25/30% should now find supply, with the bigger 4.80/5.00% area now being targeted.
- Any move back to 5% and above would start to become problematic for equities.
- Data/Events: Powell and Waller to speak on Wednesday, Retail Sales 16/04
JGBS: Bear-Steepener, BoJ Gov Ueda Reiterates Policy Stance
Apr-14 03:34
After the Tokyo lunch break, JGB futures are stronger, +22 compared to the settlement levels, sitting in near the middle of today’s range.
- BoJ Governor Ueda reiterated his stance that he won’t have any preconceptions over the conduct of monetary policy after uncertainties have risen due to US tariff measures. The central bank will take appropriate policy steps by carefully examining the economy and inflation, Ueda said in response to questions in parliament. (per BBG)
- Cash US tsys are 2-4bps richer, with a steepening bias, in today's Asia-Pac session after Friday's heavy session. The big news over the weekend was President Trump's exemptions on smartphones, computers, and other electronics, though this has been downplayed over the weekend as a procedural step. They will be looking at the whole electronic supply chain.
- Cash JGBs are 1-8bps cheaper across benchmarks, with a steepener curve. The benchmark 20-year yield is 3.7bps higher at 2.365% ahead of tomorrow's supply.
- The swap curve has twist-steepened, with rates are 2bps lower to 2bps higher. Swap spreads are mixed.
- The local calendar will see Industrial Production and Capacity Utilization data later.
CHINA: Exporters Get Ahead of Tariffs.
Apr-14 03:17
- China’s exports in USD terms outpaced estimates for March.
- Up in USD terms +12.4%, the result dramatically exceeded +4.6% estimates and the -3.0% February contraction.
- Of broader concern is the decline in imports, which contracted -4.3% YoY outpacing the forecast of -2.1%.
- The trade balance unsurprisingly surged to USD$102.6bn.
- The export data no doubt is inflated as exporters looked to get ahead of the tariffs now announced and March may prove to be an anomaly.
- The decline in imports speaks loudly as to the general malaise for the domestic consumer, something that is expected to predict further monetary policy easing soon.
