JGBS: Futures Weaker, BOJ Koeda: Up Revision To CPI View, 20Y Supply Tomorrow

• RES 4: 132.00 Round number resistance               
• RES 3: 131.85 High Apr 22 and the bull trigger     
• RES 2: 131.50 High May 7 
• RES 1: 131.47 High Jun 5 
• PRICE: 130.39 @ 05:43 BST Jun 9
• SUP 1: 130.12 Jun 5 low              
• SUP 2: 129.30/13 Low May 22 / 15 and key short-term support
• SUP 3: 128.97 Low May 14  
• SUP 4: 128.40 Low Apr 9 

The latest pullback in Bund futures appears corrective - for now - and the trend condition remains bullish. The recovery that started May 14 suggests the move down between Apr 22 - May 14, has been a correction. A resumption of gains would signal scope for a climb towards 131.85, the Apr 22 high. Key short-term support to watch is 128.97, the May 14 low. First support lies at 130.12, the Jun 5 low.

Gold prices are currently slightly higher during today’s APAC session and off the intraday low of $3293.64/oz. They are up to $3311.4, just below support at $3313.2, 20-day EMA. Better risk appetite is pressuring gold, while the softer US dollar (USD BBDXY -0.2%) and lower US yields are supporting it.

• Bullion will be monitoring progress closely when the US and China meet later today in London to discuss trade. Any sign that the two sides are unlikely to agree would likely increase safe-haven flows into the yellow metal.
• Data showing that the US jobs market was resilient in May to the increased trade tensions weighed on gold prices on Friday.
• US fiscal developments are also important. Thus, Thursday’s US Treasury bond auction and news on the likelihood of President Trump’s tax cut bill passing the senate will be watched closely. Increased fiscal risks have also driven safe haven flows.
• Silver has range traded and is currently up 0.2% to $36.05. It has moved between $35.92 and $36.09, also between initial support and resistance.
• Equities are stronger with the Nikkei up 1.0% and Hang Seng +1.0% but S&P e-mini down 0.2%. Oil prices are slightly lower with WTI -0.1% to $64.52/bbl. Copper is flat and iron ore is back below $95/t.
• Later US April wholesale data and May NY Fed 1-yr inflation expectations print. The ECB’s Elderson speaks. The focus will be on Wednesday’s May US CPI and Friday’s Uni of Michigan June survey.

JGB futures sit slightly above end Friday Friday levels from last week. The June future last 139.20, -.15 versus settlement levels. Outside of a modest rise at the start of the session, we have traded fairly tight ranges so far in Monday trade. A modest rebound in US Tsy 10yr futures has likely seen some positive spill over. 

• The local data calendar saw positive Q1 GDP revisions, but these didn't impact JGB sentiment. Consumption was revised slightly higher, while inventories contributed more to growth than the initial estimate. Business spending remained positive but was revised down. Overall q/q growth was flat (from an initial estimate of -0.2%).
• For cash JGB yields, the bias is higher, but we sit away from best levels for the 10yr. We were last near 1.48% (session highs rest at 1.491%). It has been a similar backdrop across other parts of the curve. The 30yr has seen some slight outperformance in yield terms, up close to 4bps, last around 2.92%.
• Focus remains on how government issuance may chance, and/or BOJ bond buying shifts as well. We haven't seen any fresh developments on this front today though.
• PM Ishiba has been on the news wires stating that public and financial market trust in Japan's finances must be maintained (via RTRS).