US TSYS: Cash Open

In post-Tokyo trade, JGB futures closed weaker, -12 compared to settlement levels, despite US tsys finishing solidly richer amid ongoing tariff uncertainty. 

• Information Technology sector shares led gainers despite ongoing tariff uncertainty after Trump denied that US officials said smartphones, computers, and other consumer electronics were excluded from tariffs over the weekend.
• "There was no tariff exception" announcement Trump said, while officials are "looking at chips, whole electronics supply chain; chips to be assessed in national Security tariff probes." Nevertheless, "markets very strong once they got used to tariffs" Trump posted Monday.
• Sentiment improved after midday on a couple of items: Pres Trump said he was "exploring possible exemptions to his tariffs on imported vehicles and parts" while Fed Gov Waller called for "flexible" monetary policy while also maintaining his view that the inflationary effects of tariffs are likely to be temporary.
• On Monday, BoJ Governor Ueda said global and domestic economic uncertainty has increased sharply due to US tariff policy. "U.S. tariffs will likely put downward pressure on global and Japanese economies through various channels," Ueda told parliament. (per RTRS)
• Today, the local calendar will be empty apart from 20-year supply.

The range overnight was 142.24 - 144.08, price opens in Asia in the middle of that range around 143.10/15. USD/JPY once again found buyers overnight putting in a low near 142.00 for the second day running as broader risk trends seemed to stabilise. 

• At the House of Representatives Budget Committee on the 14th, Prime Minister Ishiba Shigeru expressed a cautious stance on fiscal spending that relies on deficit bonds when implementing new economic measures. Opposition parties criticized the cash handout proposal.
• There had been rumours Japan had been a seller in US bonds. Bloomberg reports that the chance of this happening is nearly zero as Scott Bessent looks to prioritize Japan among allies in trade negotiations.
• The price action in USD/JPY in particular shows how the perception of the US is changing and the belief in its exceptionalism is being challenged. If this view pervades, expect the move lower in the USD to intensify.
• USD/JPY traded most of last week in free fall, so it is healthy for the market to take a breath and see some consolidation. Expect sellers back towards 144/145 on the day with some options around, a break of the 142.00 lows would see another leg lower.
• Watching the long term pivotal area around 140.00 a break sub this level would  be significant, opening up a bigger move back to 125/130.
• USD/JPY: Y144.00($1.4bln), Y145.00($1.9bln) EXP April 15 NY cut (source DTCC). 

Fig 1: USD/JPY Spot 

Source: MNI - Market News/Bloomberg 

New Zealand food prices rose 0.5%m/m in March, reversing the fall seen in Feb. Outside of fruit and vegetables prices were all up for the sub-sectors. Stats NZ noted: "Food prices increased 3.5 percent in the 12 months to March 2025, following a 2.4 percent increase in the 12 months to February 2025". We are still well sub 2023 highs though above 12% y/y. 

• In terms of the other m/m details released, rents edged up 0.3% (form 0.2%), but petrol and diesel prices were down over 2% in m/m terms. International air travel was also down for the third straight month.
• Domestic air travel, up 2.2%, along with accommodation services, up 5.7%m/m, provided some offset.
• Similar trends were evident in terms of y/y outcomes. Petrol and diesel are down noticeably in y/y terms but above 2024 lows.
• Earlier remarks from RBNZ Chief Economist Conway noted that inflation risks have shifted to the downside. This reflects global trade policy shifts, which will most likely weaken global and NZ growth. The central bank is analyzing the tariff impact ahead of the May MPS, but the scope to cut rates is still there.