JGBS: Futures Stronger Overnight, Jobless Rate Higher Than Expected

ACGBs (YM +1.0 & XM +1.0) are slightly stronger after US tsys finished Tuesday’s session modestly richer as the markets braced for President Trump's announcement of reciprocal tariffs. 

• A rising fear is of stagflation and that worry was supported by the ISM and JOLTS data. JOLTS job openings were lower than expected, and quits & layoffs were higher than expected. ISMs mixed with Mfg, new orders and employment lower than expected while prices paid jumped.
• A short while ago, a CNBC reporter posted on X, citing Republican Rep. Kevin Hern, that the tariff rates announced Wednesday will be the highest they will go and countries can then take steps to bring the tariffs down.
• Cash ACGBs are 1bp richer with the AU-US 10-year yield differential +23bps.
• Swap rates are flat.
• The bill strip pricing is +/- 1 across contracts.
• RBA-dated OIS pricing is slightly firmer today. A 25bp rate cut in May is given a 78% probability, with a cumulative 71bps of easing priced by year-end (based on an effective cash rate of 4.09%).
• Today, the local calendar will see Building Approvals and a speech from RBA Assistant Governor Kent at the KangaNews Debt Capital Market Summit.
• The AOFM plans to sell A$800mn of the 3.75% 21 May 2034 bond today.

RBNZ chief economist Conway is scheduled to speak on April 15 at 0930 NZST on how the central bank forecasts the economy. It releases updated staff forecasts in February, May, August and November, which gain a lot of attention, but it is “under no illusion that the economy will always evolve exactly” as it expects and probably won’t. In this appearance, Conway will talk about what data and tools are used, why the RBNZ forecasts and what it intends to convey with its published OCR path. The RBNZ notes that there will not be “any new information” provided on monetary policy or “commentary on latest economic data”. He will appear on Teams and a Q&A session will follow (link available here).

• RES 3: 147.74 - High Jan 15 and bull trigger (cont)
• RES 2: 146.53 - High Aug 6
• RES 1: 138.54 - High Mar 31
• PRICE: 137.48 @ 15:41 GMT Apr 01
• SUP 1: 136.67 - 1.0% 10-dma envelope
• SUP 2: 136.57 - 1.382 proj of the Jan 28 - Feb 20 - Feb 26 bear leg  
• SUP 3: 134.89 - 2.000 proj of the Jan 28 - Feb 20 - Feb 26 bear leg

JGBs are undergoing a strong bullish reversal, rejected any test of fresh cycle lows for the M5 contract. This defies the bearish momentum studies drawn on the longer-term chart, exposing the 50-dma at 139.01 as a near-term target. To the downside, sights are on 136.57, a Fibonacci projection. 144.48 is the medium-term target on any recovery.