JGBS: Futures Outperforming On BoJ Hold, US-JP 10yr Re-Widens
JGB futures are holding higher post the lunch time break as markets digest the BOJ on hold outcome. This meeting delivered little for BoJ hawks, with the vote to hold rates maintained at 7-2, while forecast changes were modest. All in all it suggested a high bar for the core board viewpoint to shift to a hike by Dec. JGB futures were last 136.18, +.05 versus settlement levels. recent lows rested under 135.80, while this week's high was above 136.30. We are still under important support though (137.30).
- Cash JGB yields have shifted lower, although moves aren't large. Still, this leaves us underperforming the recent Tsy shifts. The US-JP 10yr government bond yield differential is back close to +242bps (against recent lows of +230bps).
- The 10yr JGB is back to 1.65%, backing away once again from a 1.70% upside test. The 30yr was around 3.05%, so on track to close under 100-day EMA support.
- The 2/30s curve is little changed at +211.5bps.
- Note tomorrow we get Sep jobless rate figures, as well as Tokyo CPI. Before then we get Ueda's press conference in a little over an hour.
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LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
| Date | Time | Country | Event |
| 30-Sep | 0700 | DE | Import/Export Prices / Retail Sales |
| 30-Sep | 0745 | FR | HICP (p) / PPI / Consumer Spending |
| 30-Sep | 0855 | DE | Unemployment |
| 30-Sep | 0900 | IT | PPI |
| 30-Sep | 0900 | DE | Bavaria CPI |
| 30-Sep | 0900 | DE | North Rhine Westphalia CPI |
| 30-Sep | 0900 | DE | Baden Wuerttemberg CPI |
| 30-Sep | 1000 | IT | HICP (p) |
| 30-Sep | 1200 | EU | ECB Cipollone In Panel At Sibos |
| 30-Sep | 1300 | DE | CPI (p) |
| 30-Sep | 1350 | EU | ECB Lagarde at MonPol Conference, Bank of Finland |
| 30-Sep | 1400 | EU | ECB Elderson In Panel On Climate Action |
EURUSD TECHS: Monitoring Support
- RES 4: 1.2063 2.236 proj of the Feb 28 - Mar 18 - 247 price swing
- RES 3: 1.2000 Round number resistance
- RES 2: 1.1919/23 High Sep 17 / 2.0 proj of Feb 28 - Mar 18-27 swing
- RES 1: 1.1755/1820 High Sep 29 / 23
- PRICE: 1.1733 @ 06:17 BST Sep 29
- SUP 1: 1.1646 Low Sep 25
- SUP 2: 1.1574 Low Aug 27
- SUP 3: 1.1528 Low Aug 5
- SUP 4: 1.1392 Low Aug 1 and bear trigger.
The trend theme in EURUSD remains bullish and the recent pullback appears corrective. Attention is on support at 1.1682. the 50-day EMA. It has been pierced, a clear break of this average would signal scope for a deeper retracement and expose 1.1574 initially, the Aug 27 low. For bulls, a clear resumption of gains would refocus attention on 1.1923, a Fibonacci projection. Initial firm resistance to watch is 1.1820, the Sep 23 high.
JGBS AUCTION: 2Y Auctions Shows Weakest Demand Since 2009
Japan’s two-year government bond auction saw the weakest demand ratio since 2009.
- The bid-to-cover ratio came in at 2.81, down from 2.84 at the previous auction and well below the 12-month average of 3.79.
- The auction tail widened to 0.029 from 0.022 in the prior sale.
- The cut-off price was 100.07, lower than the 100.105 forecast in a Bloomberg survey.
