JGB TECHS: (H6) Just Off Cycle Lows

• RES 3: 140.08 High Jun 13  
• RES 2: 139.05 High Aug 4 
• RES 1: 137.30 - High Sep 8 and key short-term resistance
• PRICE: 135.91 @ 17:09 GMT Nov 12
• SUP 1: 135.58 - Low Nov 10
• SUP 2: 135.39 - 1.618 proj of the Aug 4 - Sep 2 - Sep 8 swing (cont.)
• SUP 3: 134.69 - 2.000 proj of the Aug 4 - Sep 2 - Sep 8 swing (cont.)  

Prices started last week well, growing the gap with next support into the 135.61 Oct 08 low. Despite this stability, prices remain inside the firm downtrend that’s dominated prices since mid-September, and prices will need to challenge resistance before signaling any broader reversal. Key short-term resistance has been defined at 137.30, the Sep 8 high. Further weakness would open 135.39 next, a Fibonacci projection. 

In post-Tokyo trade, JGB futures closed little changed, +1 compared to settlement levels, despite US tsys finishing 2-5bps richer. 

• Expectations that the House will vote later on Wednesday to approve the Senate-passed spending bill — which would end the record 53-day government shutdown — helped support gains in US tsys.
• US Treasury Secretary Scott Bessent on Wednesday said Americans would see "substantial announcements" in coming days aimed at lowering the prices of products like coffee, bananas and other items not grown in the US.
• Today, the local calendar will see PPI and International Investment Flow data alongside 5-year supply.
• Ahead of today’s 5-year supply, the 5-year yield yesterday pushed to a new cycle high of 1.272%. This move has supported by expectations that the 5-year sector will sit in the "sweet spot" for increased issuance, as Prime Minister Sanae Takaichi looks to deploy her first stimulus package to jump-start the economy.

Source: Bloomberg Finance LP

Gold continued to rally into the reopening of the US government on expectations that the release of the delayed data will show a weaker economy allowing the Fed to cut rates again on 10 December. This may be a bit optimistic as some Fed speakers on Wednesday suggested that with inflation above target there is a high bar to further easing for them. Also market pricing for December has come down with around 15bp priced in.

• The US House of Reps vote on the bill to reopen the government is to be held around 1900 EST/0000 GMT. Our US analysts believe that the post-shutdown data schedule should be published next week. See their FAQ here. The White House also indicated that October CPI and jobs data may not be published.
• Gold rose 1.7% to $4195.39 on Wednesday, close to the intraday high of $4211.79 and above initial resistance at $4161.4, 22 October high opening the bull trigger at $4381.5. It has started Thursday around $4199.5. Bullion is now 4.8% higher this month signalling that the correction is done. The US dollar was flat yesterday but the 2-year yield slightly lower.
• Silver rallied 4% to $53.260 to be 9.4% higher in November and is currently around $53.30. It reached $53.671 yesterday, above initial resistance at $52.374 and opening the bull trigger at $54.480. The bull cycle remains intact.