JGBS: Early Gains Reversed, IMF Warns On Fiscal Outlook, 20Y Supply Tomorrow

TYH6 is dealing at 111-23+, +0-00+ from closing levels in today's Asia-Pac session, after paring early gains (see chart). Focus has been on the weekend's tariff threat from US President Trump on EU countries in relation to Greenland.

• Bloomberg - "Donald Trump announced a 10% tariff on goods from eight European countries starting Feb. 1, rising to 25% in June, unless there's a deal for the "purchase of Greenland." The EU is weighing 93 billion worth of retaliatory levies and the use of its anti-coercion instrument, people familiar said."
• MNI Techs: After breaching technical support at 111-29 (Dec 10 low and bear trigger) - the next support level is 111-19, a Fibonacci projection: 1.236 proj of the Oct 17 - Nov 5 - 25 price swing. Below that, keep an eye on 111-11, 1.382 proj of the Oct 17 - Nov 5 - 25 price swing.
• The coming holiday-shortened week (Monday is MLK Day) will be highlighted by legal intrigue on Tuesday and Thursday, with the US Supreme Court potentially releasing its ruling on the legality of the White House's IEEPA tariffs on its next scheduled opinion day on Tuesday, and oral arguments on Wednesday over whether President Trump is allowed to fire Fed Governor Lisa Cook.

Bloomberg Finance LP

The BBDXY has had a range today of 1208.86 - 1211.03 in the Asia-Pac session; it is currently trading around {BBDXY Index}. The USD has gapped lower this morning in reaction to the Greenland tariffs, like stocks I am always wary of an early Asian morning gap on the open as it has a habit of being filled in. On the day, it looks like more of the same choppiness while we trade within the 1205-1215 range, the Supreme court ruling could also potentially be announced this week, a failure to rule in favour of Trump’s tariffs could see the headwinds for the USD further increase. A break below 1204-1205 would potentially signal a deeper pullback is on the cards.

• EUR/USD -  Asian range 1.1578-1.1638, Asia is currently trading {EURUSD Curncy}.  We continue to trade firmly back in the wider 1.1450-1.1850 range which dominated the last 6 months of the year and we need a catalyst to get a break and get some sort of a trend going again. On the day, support remains back toward the 1.1550 area, and resistance is around 1.1655-1.1675 keeping us pinned for the time being. 
• GBP/USD - Asian range 1.3363-1.3391, Asia is currently dealing around {GBPUSD Curncy}. The pair had a quick look at the 1.3350 area but quickly rebounded. On the day, watch to see if sellers can continue to keep the price below 1.3430-1.3460, the bears need a break back below 1.3300-1.3350 to signal a correction lower might be on the cards. 
• Cross asset : SPX -0.85%, Gold $4660,  BBDXY 1209, Crude Oil $59.65
• Data/Events : Italy Bloomberg Jan Economic Survey, Germany Bloomberg Jan. Economic Survey, France Bloomberg Jan. Economic Survey, Spain Bloomberg Jan. Economic Survey/Home sales, EZ Bloomberg Jan. Economic Survey/CPI

Fig 1: GBP/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

ACGBs (YM -2.5 & XM -3.0) are weaker after a relatively subdued session (see chart). There has been no cash US tsys trading today with the market closed for MLK Holiday.

• The Melbourne Institute inflation gauge for December picked up to 3.5% from November’s 3.2% posting at 1.0% m/m increase. This was the sharpest monthly increase in two years bringing the annual rate to its highest since April 2024 but as this series is headline it continues to be impacted by the timing of government electricity rebates.
• Cash ACGBs are 3bps cheaper.
• RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 29% for February to 91% by June and 141% by December 2026.  
• Tomorrow, the local calendar will be empty.  
• The highlight of this week will be December jobs data released on Thursday. Bloomberg consensus expects November’s 21.3k decline to be fully unwound with a 27k rise in employment but that the unemployment rate should tick up 0.1pp to 4.4%. The data tend to be volatile and so the 3-month average gives a better indication of the trend.
• A new 21 October 2037 Treasury Bond is planned to be issued via syndication this week (subject to market conditions).

Bloomberg Finance LP