JGBS: Futures Dip Sees Some Support, All Eyes On 40yr Auction Today

TYH6 is dealing at 112-17, -0-01 from closing levels in today's Asia-Pac session.

• Thin holiday-related trading remains as geopolitical tensions drive flight-to-quality flows.
• Focus remains on the ongoing US blockade of Venezuela, which is aimed at regime change, although there has also been the US bombing of militants in Nigeria on Christmas Day to digest.
• President Trump and President Zelenskyy met in Florida and the former sounded optimistic on progress for a peace deal. He had spoken to Putin on the phone earlier.
• US equity futures are dealing little changed.
• On Friday, cash US tsys finished mixed, curves twisting steeper with 2s-10s holding modestly higher vs. weaker Bonds after the bell.
• Monday’s US data sees Pending Home Sales MoM (1000ET), Dallas Fed Mfg Activity (1030). FOMC minutes for the December meeting will be released at 1400ET Tuesday.

Silver jumped over 10% on Friday helped by thin holiday-related trading as geopolitical tensions drove flight-to-quality flows. The silver market has significantly lower volumes than gold and so moves can be amplified. Both precious metals found support from the ongoing US blockade of Venezuela which is aimed at regime change but also the US bombing of militants in Nigeria on Christmas Day. The US dollar finished flat on Friday but the BBDXY was down 0.8% on the week and the 2-year yield was lower. 

• Nigeria said that it would welcome further US strikes on jihadists in its country. The US also hit Islamic State in Syria last week.
• Presidents Trump and Zelenskyy met in Florida and the former sounded optimistic on progress for a peace deal. He had spoken to Putin on the phone earlier.
• Silver soared 10.3% to $79.287/oz just off the new record high of $79.314, clearing all resistance levels reinforcing bullish conditions. It rose 18.1% last week to be up 40.3% in December and 174.3% in 2025.
• Like gold, silver has been supported by lower US rate expectations, Fed independence concerns, rising government debt and geopolitical/trade issues but it has also been boosted by strong demand for tech and renewables production and low physical inventories, which will make coverage of paper purchases difficult.
• Gold was also stronger but significantly underperformed silver. It was up 1.2% to $4533.21 after reaching $4549.92. It cleared resistance at $4536.0, a Fibonacci projection, opening $4578.3 and confirming the resumption of the primary uptrend. It increased 4.5% on the week and 6.9% on the month and 72.7% this year.