CHINA: Futures Down Again on Liquidity Withdrawal

The 30-year JGB auction delivered mixed results. The low price fell short of dealer expectations of 99.15, per the Bloomberg survey. However, the cover ratio increased to 3.4110x from 3.30806x. On the other hand, the auction tail shortened to 0.17 from 0.18, indicating an improvement in bidding strength.

• Today’s result is an improvement versus the 10-year auction earlier this month, which demonstrated weak demand metrics.
• As highlighted in our preview, today's issuance arrived with an outright yield at a new cycle high of 3.351%, approximately 10bps higher than last month’s issuance.
• The 30-year yield has rallied strongly following the result, suggesting that the recent bear-steepening was overdone. Although newly elected Liberal Democratic Party leader Sanae Takaichi is perceived to have an expansionary fiscal and monetary policy stance, a lot of these expectations appear to have already been priced into the market.

The Japanese Ministry Of Finance (MoF) sells Y536.8bn 30-Year JGBs:

• Average Yield (%): 3.248 (prev. 3.264)
• Average Price: 99.27 (prev. 92.98)
• High Yield (%): 3.259 (prev. 3.277)
• Low price: 99.10 (prev. 92.80)
• % Allotted At High Yield (%): 41.4864 (prev. 5.2264%)
• Bid/Cover: 3.4110x (prev. 3.3080x)

Bitcoin had a range overnight of $123 334k - $126 251k, Asia is trading around $124 320k, -0.75%. Bitcoin once more found solid buyers on the dip back towards its first support around $108 000 at the end of September. Big support remains in between the $100k-108k area where demand should return for those waiting to “buy the dip”, the crypto treasury firm's chief amongst those. Risk has surged higher across the board(stocks, gold, silver) and this time bitcoin was not missing out as it hit new all-time highs to join the party.

• CNBC - “Paul Tudor Jones says ingredients are in place for a massive rally before a ‘blow off’ top to bull market. He believes the bull market still has room to run before it reaches its final phase. He said he would own a combination of gold, cryptocurrencies and Nasdaq tech stocks between now and the end of the year to take advantage of the rally fueled by the fear of missing out.”
• Andreas Steno Larsen on X: "Bitcoin has flipped correlations with long bond yields since the pandemic, this is a big shift.”
• Milk road on X: “Bitcoin’s sitting just 3% below an 8 year resistance trendline. If the weekly candle closes above $128K, the line that’s capped every rally since 2017 finally breaks.” See Graph Below.

Fig 1: Bitcoin spot Weekly Chart

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