US TSYS: Cash Open

In post-Tokyo trade, JGB futures are sharply weaker, -128 compared to settlement levels, after US tsys finished much weaker yesterday. 

• Markets experienced significant turbulence overnight, with extreme volatility driven by poor liquidity conditions. The situation was further exacerbated by a flurry of social media activity from President Trump, who threatened an additional 50% tariff on Chinese imports.
• Markets appear to be starting to anticipate the easing impact of last week's sweeping tariff announcement as more countries are looking to negotiate or at least respond to the Trump administration's trade policy.
• The sharp risk-off tone in yesterday's Asia-Pacific session buoyed US tsys. The 10Y yield tapped a 3.8693% low as stocks gapped lower on the open before bouncing to 4.2122% during NY morning trade. Focus squarely on US tariffs and foreign countries' responses.
• Today, the local calendar will see BoP Current Account and Trade Balance data alongside 30-year supply.

Oil prices finished Monday over 1.5% lower but off the day’s trough, as fears grow that higher-than-expected US tariffs could cause a recession there and a major slowdown in global growth. Prices have started today higher helped by positive US equity futures on imminent tariff negotiations.

• They spiked early in the US session on an incorrect report that the implementation of US tariffs would be delayed 90 days. The move was brief as the news was soon refuted.
• Crude is now almost 15% lower this month, which could be disinflationary while the inflation outlook in a trade war remains highly uncertain.
• WTI finished down 1.7% to $60.96/bbl after reaching $63.90 and is now -14.7% this month. It fell to $58.95 during Monday’s APAC session. It has started today up 1.0% to $61.33. The benchmark is in oversold territory but there is scope for the bearish trend to continue. Initial support is at $59.39 with resistance at $64.85.
• Brent fell 1.9% to $64.36 after spiking to $67.43 following a low of $62.51 earlier. It is now down 13.9% in April, which has cancelled the bullish theme. Initial support is at $63.01 and resistance at $67.95, 5 March low.
• There have been downward revisions to oil price forecasts with Goldman Sachs revising Brent down $4 to $62/bbl by December 2025 and Morgan Stanley by $5 to $65 for Q2 with expected demand growth now 0.5mbd lower by H2 2025. There was record trading of Brent put options on Friday, according to Bloomberg, signalling that the market is preparing for a further sell off.
• China retaliated with a 34% tariff on imports from the US and US President Trump threatened to respond with another 50% on top of the current 54%, which added to market jitters.
• There are to be “direct” negotiations at a “very high level” between the US and Iran on Saturday to discuss an agreement on its nuclear programme. Trump warned that it would be “a very bad day for Iran” if they failed to agree. Developments in this space could cause more volatility in energy markets.

TYM5 is 111-29, -0-05 from closing levels in today's Asia-Pac session. 

• Markets experienced significant turbulence overnight, with extreme volatility driven by poor liquidity conditions. The situation was further exacerbated by a flurry of social media activity from President Trump, who threatened an additional 50% tariff on Chinese imports.
• Trading volumes were heavy, with over 5.3 million TYM5 contracts changing hands after Monday’s close.
• The US tsy 10-year yield, which ranged between 3.85% and 3.95% during the Asia-Pac session, moved sharply higher as European markets opened. It reached an intraday high of 4.21% before finishing at 4.18%, +19bps. The yield curve steepened, with the 2-year yield rising by 11bps.
• Economic data remains light ahead of key releases later this week. Markets are looking ahead to Wednesday’s release of the March FOMC minutes, followed by CPI data on Thursday and PPI on Friday.