BOJ: Fixed Rate Purchase Offer
The BoJ offers to buy an unlimited amount of 5- to 10-Year JGBs at a fixed rate of 0.50%.
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STIR: $-Bloc Firmer, US & CA STIR Leading
US STIR has firmed 5bp and 10bp respectively for the May and June FOMCs since the unexpected decline in the US unemployment rate to 3.5% (3.6% expected) last week. At the bell in NY trade, the Fed funds implied hike for May was 18.4bp and 18.8bp cumulative for June at 5.01% (expected terminal rate). There are 68bp of cuts priced for 2023.
- The BoC is expected to keep interest rates unchanged at its meeting on Wednesday, resulting in little change to the pricing for the April meeting, which currently indicates a 10% chance of a 25bp cut. However, pricing for meetings after June has firmed by 13-22bp since Wednesday's close, with December being the most affected, following the unexpected decline in unemployment rates in both Canada and the US.
- RBA dated OIS is 5-6bp firmer for meetings beyond August with December leading. A 25% chance of a 25bp hike in May is priced with year-end easing expectations at 24bp versus 29bp ahead of the Easter holiday.
- RBNZ dated OIS pricing is 2-4bp firmer across meetings today with 21bp of tightening priced for May. 26bp of easing is priced for Nov-23 off a terminal OCR expectation of 5.49% (July).
Figure 1: $-Bloc STIR: Terminal Rate Expectations & Year-End Pricing
Source: MNI – Market News / Bloomberg
US TSYS: Curve Marginally Steeper
Cash tsys have opened dealing flat to 2bps richer across the major benchmarks, the curve has bull steepened. Asia-Pac participants have faded Monday's cheapening, perhaps using the opportunity to close out short positions/enter fresh longs. TYM3 deals at 115-17+, +0-01, at the top of the narrow 0-02 range observed thus far.
- CPI and PPI data from China headlines the Asia-Pac session today, the print is due in just under 90 minutes.
AUD: AUD/JPY: Supported Below ¥88
AUD/JPY has risen ~1.3% from April lows seen in the wake of last weeks RBA meeting. The pair sits a touch below its 20-Day EMA after bears failed to sustain a break of ¥88 handle.
- Previously highlighted comments from BOJ Governor Ueda pressured the Yen yesterday which aided the recovery in AUD/JPY.
- The cross however does remain well with recent ranges, a ¥86/90 range has been respected for the most part.
- Bears first look to sustain a break of ¥88 from here they can target 2023 lows at ¥86.06.
- Bulls look to sustain a break of the 20-Day EMA (¥88.76), from here they can target the 200-Day EMA at ¥91.00.
Fig1: AUD/JPY Daily Spot, EMAs
Source: MNI/Bloomberg
