BONDS: Heavy Session, Underperformed $-Bloc, Food Prices Tomorrow

The AUD and NZD have both held onto their respective gains from last week in tight Asian ranges. Broad USD weakness last week has seen an overhang of AUD and NZD shorts being pared back.

• AUD/USD - Asian range 0.6278 - 0.6314, AUD has traded sideways for the whole Asian session, albeit near the highs of last week. Shorts will be hoping for sellers to return but will be watching the 0.6400 area this week for signs of breaking to signal the next leg of position squaring.
• AUD/JPY - Asian range 89.57 - 90.81, AUD/JPY fell away early in the session moving down to the 89.60 area before buyers reemerged. Price goes into the London open around 90.00. AUD/JPY is trying to build a base as risk stabilises, but it remains to be seen if this will last. Expect supply once more back towards the pivotal 94.00 area.
• NZDUSD - Asian range 0.5819 - 0.5860, NZD has traded sideways the whole session but there is still no dip. NZD printing around 0.5850 going into London, the market is short and the price action poor. Watch a close above the 0.5850 area for the next potential level to trigger short covering.
• AUD/NZD - Asian range 1.0754 - 1.0830, the cross drifted lower in the Asian session before finding some buyers towards the 1.0760 area. The cross is going into London pretty directionless but the risk still feels that bounces will be capped as liquidity in the NZD dries up quicker than for the AUD on any move higher.

Fig 1: NZD Spot 

Source: MNI - Market News/Bloomberg Antipodean Wrap - AUD & NZD Holding Onto Gains

TYM5 has traded in a tight 109-17/109-31 range, going into the London open trading near its highs around 109-31,+0-07+ from its close on Friday.

• The 10-year yield has consolidated in a tight range of 4.4561 - 4.4876 in Asia.
• The market is starting to realise the FED will not be stepping in to rescue it by cutting rates, as long as it expects inflation to track higher on the back of Trump’s policies.
• This will be a big week for US tsys but it feels there has been some trust lost and there is more position unwind to come. Dips back towards 4.25/30% should now find supply, with the bigger 4.80/5.00% area now being targeted.
• Any move back to 5% and above would start to become problematic for equities.
• Data/Events: Powell and Waller to speak on Wednesday, Retail Sales 16/04

After the Tokyo lunch break, JGB futures are stronger, +22 compared to the settlement levels, sitting in near the middle of today’s range.

• BoJ Governor Ueda reiterated his stance that he won’t have any preconceptions over the conduct of monetary policy after uncertainties have risen due to US tariff measures. The central bank will take appropriate policy steps by carefully examining the economy and inflation, Ueda said in response to questions in parliament. (per BBG)
• Cash US tsys are 2-4bps richer, with a steepening bias, in today's Asia-Pac session after Friday's heavy session. The big news over the weekend was President Trump's exemptions on smartphones, computers, and other electronics, though this has been downplayed over the weekend as a procedural step. They will be looking at the whole electronic supply chain.
• Cash JGBs are 1-8bps cheaper across benchmarks, with a steepener curve. The benchmark 20-year yield is 3.7bps higher at 2.365% ahead of tomorrow's supply.
• The swap curve has twist-steepened, with rates are 2bps lower to 2bps higher. Swap spreads are mixed.
• The local calendar will see Industrial Production and Capacity Utilization data later.