GOLD: Gold Softens in Asia Trading Ahead of US Data Release

Tsunami warnings continue across Asia Pac and to the US in the aftermath of the powerful earthquake near Russia, earlier today. 

• Rtrs notes: "A magnitude 8.8 earthquake struck off Russia's Far Eastern Kamchatka Peninsula on Wednesday, damaging buildings and generating a tsunami of up to 4 metres (13 feet) that prompted warnings and evacuations stretching across the Pacific Ocean."
• From Bloomberg: "...triggering tsunami alerts from Japan to Canada, California, Hawaii, and as far away as Indonesia and New Zealand."
• Tsunami's have already reportedly hit parts of Japan, but could be expected to continue for the next day or so.
• Japan PM Ishiba stated: "It’s possible that the second, third and fourth waves of tsunami could be much bigger” than the first, he said, asking people to remain vigilant until the warning is lifted."
• Headlines also crossed: ""*TSUNAMI WARNING IN EFFECT FOR CALIFORNIA: NWS NTWC" - BBG, ", along with "USCG OCEANIA: ISSUED ORDER FOR ALL COMMERCIAL VESSELS TO EVACUATE ALL COMMERCIAL HARBORS IN HAWAII, ALL HARBORS ARE CLOSED TO INCOMING VESSEL TRAFFIC. - [RTRS]"
• China also noted: "*CHINA ALERTS TSUNAMI MAY HAVE 'DISASTROUS IMPACT' ON ITS COAST" - BBG"
• Market reaction has been fairly limited so far, with JPY gain a little ground on the initial headlines, but there hasn't been any follow through, as the market awaits more details. The 2011 earthquake off the coast of Japan triggered a sharp bout of yen strength.
• Via NYT: "The quake is tied for the sixth-largest on record, according to the U.S. Geological Survey. It is the most powerful since the 2011 earthquake off Japan’s east coast, that triggered the Fukushima tsunami and nuclear disaster."  

The TYU5 range has been 111-10+ to 111-13 during the Asia-Pacific session. It last changed hands at 111-11+, unchanged from the previous close. 

• The US 2-year yield has edged higher trading around 3.87%.
• The US 10-year yield has shifted higher trading around 4.326%, up 0.01 from its close.
• The 10-year yield has moved back towards its pivot within the wider range 4.10% - 4.65%, decent supply was seen around 4.30/35% first up. A decent bounce was seen off this support but the move has failed to follow through above 4.40% for now. The Data this week should hopefully provide more clarity going forward. A Clear break of the support opens a move to the bottom end of the range.
• Renaissance Macro Research on X: ”Trade, inventory investment and public sector spending & investment adding 2.2ppts in Q2, according to Atlanta Fed. Thus, private domestic demand is running under 1% in real terms.”
• Andreas Steno Larsen on X: “The US has got the softest inflation surprises on Earth. That should impact the FOMC tomorrow.”
• Jeff Weniger on X: “The phone bill. Cereal. Gas. Coffee. A used car for work. These are things people still buy even when money is a big problem. The 12-month smoothed inflation rate on essentials is 1.8%. The last time the Fed Funds rate exceeded "essentials inflation" by this much was Q3/2007.” See Fig.1 below.
• Data/Events:   MBA Mortgage Applications, ADP, US Treasury Quarterly refunding, GDP, Pending Home Sales, FOMC

Fig 1: Fed Funds vs "Essential Purchase" Inflation

Source: MNI/@JeffWeniger

• China's bond futures are rallying modestly today, trying to recover from yesterday's fall.  
• The 10-year is up  +0.08 108.225 but remains below all major moving averages.  The nearest, the 20-day EMA, is at 108.60.
• The 2-year bond future is up +0.04 to 102.338 yet remains below all major moving averages still; with the 20-day EMA at 102.39.

• The 10-year CGB is at 1.73% today, having closed yesterday at 1.74%