CHINA: Bond Wrap.

JGB futures are stronger, +5 compared to the settlement levels.

• Outside of the previously outlined trade balance and machine orders data, there hasn't been much by way of domestic drivers to flag.
• The market’s attention is on Friday’s BoJ MPM decision, where the board is expected to keep the policy rate unchanged at 0.25%. The upside risk to prices, driven by high import costs—previously a key concern for policymakers in July— has eased due to the yen’s recent appreciation.
• Before that, the FOMC will announce its policy decision later today, with markets leaning more toward a 50bp rate cut than a 25bp move from the Fed.
• Cash US tsys are ~1bp richer in today’s Asia-Pac session after yesterday’s modest sell-off. Yesterday’s session reflected position squaring ahead of today’s FOMC policy announcement.
• The cash JGB curve has twist-flattened, pivoting at the 2-year, with yield swings bounded by +/- 1.5bps. The benchmark 10-year yield is 0.3bp lower at 0.826% versus the recent low of 0.74%.
• Swap rates are 1-2bps lower out to the 30-year and 4bps higher beyond. Swap spreads are mixed.
• Tomorrow, the local calendar will see Tokyo Condominiums for Sale data alongside an Enhanced Liquidity Auction covering OTR 5-15.5-year JGBs. 

• RES 4: 1.3362 1.618 proj of the Jun 27 - Jul 17 - Aug 8 price swing
• RES 3: 1.3328 76.4% retrace of the Jun 2021 - Sep 2022 bear leg
• RES 2: 1.3266 High Aug 27 and the bull trigger
• RES 1: 1.3238 High Sep 6
• PRICE: 1.3159 @ 05:57 BST Sep 18
• SUP 1: 1.3101/3002 20-day EMA / Low Sep 11
• SUP 2: 1.2993 50-day EMA
• SUP 3: 1.2895 61.8% retracement of the Aug 8 - 27 bull leg
• SUP 4:  1.2852 Low Aug 16   

GBPUSD traded higher Monday, extending the latest recovery, but has since pulled back. The recent move down (since Aug 28) is considered corrective and this has allowed an overbought condition to unwind. A resumption of gains would refocus attention on key short-term resistance and a bull trigger at 1.3266, the Aug 27 high. For bears, a stronger sell-off would instead signal scope for a deeper retracement, towards the 50-day EMA, at 1.2993.