LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)

JGB futures are sharply weaker and at session lows, -64 compared to settlement levels, after today's 10-year supply.

• (Bloomberg) " The Iran war is rekindling inflation concerns across financial markets, sapping the outlook for global bonds. Traders have offloaded government debt since Monday as they game-plan how a prolonged conflict in the Middle East may ramp up oil and supercharge inflation."
• The 10-year JGB auction delivered mixed results, with the low price failing to meet expectations at 99.77, according to the Bloomberg dealer poll. However, the cover ratio increased to 3.3043x from 3.0196x. The tail also lengthened slightly to 0.06 from 0.05.
• This performance came with an outright yield that was 10-15bps below than the level of last month's auction and ~25bps lower that the cycle high. The 2s/10s yield curve was also ~10bps flatter last month’s auction and around 35bps below its a cycle high.
• Cash US tsys are flat to 3bps cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s heavy losses.
• Cash JGBs are 2-6bps cheaper across benchmarks out to the 30-year, and 1.5bps richer beyond.
• Swap rates are 1-3bps higher.
• Tomorrow, the local calendar will see S&P Global Composite & Services PMIs and Consumer Confidence Index.

Source: Bloomberg Finance LP

The BBDXY has had a range today of 1195.13 - 1196.96 in the Asia-Pac session; it is currently trading around 1196. The BBDXY built on the move that started in Asia yesterday as the USD pushed higher, challenging the 1195-1200 resistance. The market has been very bearish the USD especially against EM so it was interesting to see the USD remain well supported against EM and Oil affected currencies, even as US stocks reversed their earlier losses to close flat on the day. The market is not positioned for this, especially in EM where liquidity is at a premium. USD/Asia has moved higher today led by USD/KRW(+1.61%). On the day, watch to see if the USD can continue to build on this strong start to the week and potentially break above the important 1195-1200 area in the coming days. A sustained break above 1200 could potentially signal a deeper pullback.

• EUR/USD -  Asian range 1.1683-1.1707, Asia is currently trading 1.1690. The pair remained heavy as the USD built on its gains and oil added to the pair's headwinds. The price does not look great for the bulls now and a sustained close below 1.1700 could signal the potential for a deeper pullback toward the 1.1400-1.1500 area. On the day, having clearly broken out of its recent range I would be looking for rallies to now be faded initially. The first sell-zone is back toward 1.1725-1.1745 and then the 1.1800 area, looking for the move lower to now build for a potential test back toward 1.1500.
• GBP/USD - Asian range 1.3392-1.3425, Asia is currently dealing around 1.3400. GBP broke through 1.3400 and collapsed lower but could not maintain the move and is back around the breakout level once more. It really needs to hold above the pivotal 1.3300 area for any chance of a base to form. On the day, I suspect rallies toward 1.3450-1.3500 will continue to be faded as the USD looks to build on its gains. Sellers will be looking for the 1.3300 to be challenged, a break could signal a potential top is on place.
• Cross asset : SPX -0.65%, Gold $5375, US 10-Year 4.045%, BBDXY 1196, Crude Oil $62.62
• Data/Events : 11:00 a.m.: Italy February CPI, 11:00 a.m.: Eurozone February CPI, 3:55 p.m.: Fed’s Williams Speaks, 4:30 p.m.: ECB’s Kocher Speaks, 4:40 p.m.: ECB’s Sleijpen Speaks, 5:45 p.m.: Fed’s Kashkari Speaks, UK Chancellor Rachel Reeves delivers her Spring Statement.

Fig 1: GBP/USD Spot Daily Chart

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

ACGBs (YM -10.0 & XM -9.0) are sharply weaker in line with global bonds, as the haven bid sparked by the weekend's US and Israel strikes on Iran faded.

• The market was also under pressure following RBA Governor Bullock’s comments today. In the Q&A after today’s speech, she noted that every central meeting is live and that she didn't want people to assume that the central bank would only move after quarterly inflation prints.
• The latest ACGB Mar-47 auction saw strong demand, with the weighted average yield coming in 0.99bps through mid-yields. Moreover, the cover ratio was high at 4.7167x. The AOFM plans to sell A$900mn of the 4.75% 21 October 2037 bond on Wednesday and A$800mn of the 1.50% 21 June 2031 bond on Friday.
• Cash US tsys are flat to 2bps cheaper, with a steepening bias, in today’s Asia-Pac session after yesterday’s heavy losses.
• Cash ACGBs are 8-10bps cheaper with the AU-US 10-year yield differential at +68bps.
• The bills strip has bear-steepened, -5 to -9.
• RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 30% for March to 121% by June and 182% by December 2026.  
• Tomorrow, the local calendar will see Q4 GDP. 

Bloomberg Finance LP