JGBS: Cheaper With US Tsys, Nvidia Beats & Trump Tariff Uncertainty
JGB futures are stronger, +12 compared to settlement levels, hovering near Tokyo session highs.
- Cash US tsys are 2-4bps cheaper in today's Asia-Pac session.
- Eminis and Nasdaq futures are stronger after Nvidia printed better-than-expected results, despite headwinds regarding chip curbs to China.
- Bloomberg - "There's an apparent irony that US stock futures, which were already higher than they were when Trump's 'Liberation Day' tariffs were announced, are now rallying on news that they've been blocked by a US court. The decision, for as long as it stands, is clearly good news for the US economy, though it doesn't say much about the state of US policymaking and it won't help businesses make decisions."
- Japan’s consumer confidence index rose to 32.8 in May, compared with the median estimate of 31.8.
- Cash JGBs are flat to 4bps cheaper across benchmarks, with a steeper curve. The benchmark 40-year yield is 3.4bps higher at 3.39% versus its high of 3.68%.
- Swap rates are 1bp lower to 4bps higher. Swap spreads are mixed.
- Tomorrow, the local calendar will see Jobless Rate, Job-To-Applicant Ratio, Tokyo CPI, Industrial Production, Housing Starts and Retail Sales data alongside 2-year supply.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
AUSSIE BONDS: Subdued Session Ahead Of Q1 CPI
ACGBs (YM -1.0 & XM -2.5) are weaker but near the middle of the ranges of today’s Sydney session on a data-light day.
- No cash US tsys trading in Asia-Pac today, with Japan out. TYM5 is trading at 111-27+, -0-01+ from closing levels.
- Cash ACGBs are 1-2bps cheaper.
- The bills strip is flat to -1 across contracts.
- Global foreign exchange markets recorded a “sharp rise” in volatility earlier this month as traders worked through the potential impact of US tariff announcements, before becoming “more settled” in recent days, according to Reserve Bank of Australia Assistant Governor Christopher Kent. (per BBG)
- RBA-dated OIS pricing is little changed across meetings today. A 50bp rate cut in May is given a 12% probability, with a cumulative 117bps of easing priced by year-end.
- Tomorrow, the local data calendar will see Q1 CPI. It is forecast to show the RBA's preferred trimmed mean falling below the top of the 2-3% target band for the first time since Q4 2021. This should signal another 25bp cut on May 20. Retail sales are on Friday. The Federal Election is on Saturday.
- The AOFM plans to sell A$1200mn of the 2.75% 21 June 2035 bond on Friday.
ASIA STOCKS: A Modest but Broadly Positive Day Across Asia.
As President Trump is now indicating that he will reduce the expected tariffs on autos, Asian equities performed well today with Korea’s auto stocks up over +2.5% giving the KOSPI a boost.
China’s major bourses did very little in what seemed like a directionless day despite the positive headline.
- The Hang Seng rose just +0.12% today despite a broader regionally positive day whilst the CSI 300 fell -0.13%. Shanghai Comp was down -0.03% and Shenzhen held onto modest gains of +0.35%
- The KOSPI delivered strong gains of +0.51%, led by the auto sector and delivering three successive days of gains.
- The FTSE Malay KLCI went the other way falling -0.15% after yesterday’s strong gains.
- In Indonesia the Jakarta Composite’s good run continues eking out a gain of +0.50% for sixth successive day of gains
- Singapore’s FTSE Straits Times was up +0.25% whilst the PSEi in the Philippines was down marginally -0.06%.
- India’s NIFTY 50 opened marginally positive trying to follow on from yesterday’s strong gains of +1.20% having taken back the losses from earlier in the month to be back at year to date highs.
BOBL TECHS: (M5) Holding On To The Bulk Of Recent Gains
- 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: 119.360 @ 05:37 BST Apr 29
- SUP 1: 119.180 Low Apr 23
- SUP 2: 118.952 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 the bulk of their latest gains and a bull cycle remains in play. The steep sell-off between Apr 7 - 9 appears corrective. The early April rally resulted in a break of key resistance at 119.040, the Feb 28 high, strengthening 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 118.952.
