BOBL TECHS: (H5) Bullish Short-Term Conditions
- RES 4: 118.310 High Dec 20
- RES 3: 118.27 61.8% retracement of the Dec 2 - Jan 14 bear leg
- RES 2: 118.100 High Jan 2
- RES 1: 117.980 High Jan 3
- PRICE: 117.810 @ 05:46 GMT Feb 4
- SUP 1: 117.380 Low Jan 3
- SUP 2: 117.220 20-day EMA
- SUP 3: 116.550 Low Jan 24
- SUP 4: 116.280 Low Jan 14 / 15 and a key support
A short-term bullish corrective phase in Bobl futures remains in play and Monday’s strong start to the week reinforces current conditions. The contract has traded through both the 20- and 50-day EMAs. A clear break of 117.800, 50.0% of the Dec 2 - Jan 14 bear leg, would signal scope for an extension towards 118.258, the 61.8% retracement of the Dec 2 - Jan 14 bear leg. Initial support to watch lies at 117.165, the 20-day EMA.
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BUND TECHS: (H5) Approaching Key Support
- RES 4: 137.75 Low Dec 10
- RES 3: 135.15 High Dec 13
- RES 2: 134.30 20-day EMA
- RES 1: 133.48 High Jan 3
- PRICE: 132.36 05:51 GMT Jan 6
- SUP 1: 132.22 Intraday low
- SUP 2 132.00 Low Nov 6 and key support
- SUP 3: 130.78 123..6% retracement of the Nov 6 - Dec 2 bull leg
- SUP 4: 130.00 Psychological round number
The trend cycle in Bund futures remains bearish and last Friday’s sell-off reinforces this theme. The contract has recently traded through 133.22, 76.4% of the Nov 6 - Dec 2 bull cycle. This has opened key support at 132.00, the Nov 6 low. Clearance of this level would strengthen a bearish theme. Initial resistance is seen at 133.48, Friday’s high. Key short-term resistance is at 134.30, the 20-day EMA.
US TSYS: Cash Bonds Dealing Cheaper But Off Worst Levels
TYH5 is 108-16, -0-04+ from NY closing levels.
- Cash bonds are ~1bp cheaper in today’s Asia-Pac session after Friday’s heavy close.
- On Friday, US projected rate cuts through mid-2025 were as follows: Jan'25 steady at -2.8bp, Mar'25 -13.2bp, May'25 -17.8bp, Jun'25 -26.5bp.
- US economic data and Treasury supply are being brought forward this week to accommodate Thursday's "day of mourning" to honour President Carter. The Federal holiday sees most markets closed; the exception so far is CME rates, which will operate on a shortened session.
- Thursday's weekly jobless and continuing claims will be released on Wednesday according to the Dept of Labor site.
- Later today, the US calendar will see S&P Global Services & Composite PMIs, Factory Orders and Durable Goods Orders.
JGBS: Cheaper, BoJ Ueda Reiterates Hikes Coming, 10Y Supply Tomorrow
JGB futures are holding weaker but off session lows, -16 compared to settlement levels, on the first day of trading since 30 December.
- According to MNI’s technicals team, medium-term trend signals on the continuation chart continue to point south. A resumption of the trend would pave the way for a move towards 141.56, a Fibonacci projection point on the continuation chart. A stronger recovery would open 144.48, the Nov 11 high.
- BoJ Governor Ueda sent a fresh reminder that he’s going to raise the benchmark rate if the economy continues to improve this year.
- “Our stance is that we will raise the policy interest rate to adjust the degree of monetary easing if economic and price conditions keep improving,” Ueda said. The governor spoke at a conference held by the Japanese Bankers Association. (See BBG link)
- Cash US tsys are ~1bp cheaper in today’s Asia-Pac session.
- Cash JGBs are 1-3bps cheaper across benchmarks beyond the 1-year (+3.4bps). The benchmark 10-year yield is 2.3bps higher at 1.123% after earlier testing the cycle high of 1.134% set on 30 December 2024.
- Swap rates are 1-5bps higher, with the 20-30-year zone leading. Swap spreads are mixed.
- Tomorrow will see Monetary Base data and 10-year supply.
