JGBS: Heavy Start For Futures On Post-Holiday Plays, Off Early Lows
JGB futures trade heavily as Tokyo plays catch up to the dynamics observed since Monday’s local close, leaving the contract -60 ticks or so, ~20 ticks off session lows printed just after the Tokyo open. 7s lead the weakness on the curve, given the move in futures, with the major benchmarks across the cash curve running little changed to ~7bp cheaper. The swap curve has seen a more linear round of steepening, with swap spreads wider across the curve, excluding 7s, which are flat to a touch tighter.
- Local headline flow has seen Finance Minister Suzuki point to the general risk averse moves witnessed in markets at different times in recent days, while identifying the need to coordinate with the BoJ and global counterparts to mitigate risks and welcoming the daily swap line agreements between the major global central banks. He also stressed the need to act on inflation, with reserve funds to be deployed flexibly re: that mater.
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US TSYS: Narrow Ranges, Cash Remains Closed
TYH3 deals at 111-30, -0-02, with a narrow 0-02+ range observed. Asia-Pac participants continue to digest Friday richening and heightened geopolitical tensions (centred on Sino-U.S. relations and the latest round of North Korean missile launches).
- A reminder that cash tsys are closed today for the observance of the Presidents Day holiday.
- Participants look to the LPR fixings from China, which are on the wires in just over one hour, Bloomberg survey shows no changes are expected for the 1 and 5-Year LPR.
JGB TECHS: (H3) More Stable After January Volatility
- RES 3: 151.13 - High Mar 3
- RES 2: 149.75/150.81 - High Nov 11 / High Aug 5
- RES 1: 147.74/148.79 Low Jan 23 / High Nov 16
- PRICE: 146.68 @ 14:43 GMT Feb 17
- SUP 1: 145.13 - 1.0% 10-dma envelope
- SUP 2: 144.15 - Low Jan 13
- SUP 3: 144.10 - 2.0% Lower Bollinger Band
The January rally in JGBs continues to fade, although prices still hold the bulk of the post-BoJ bounce. The rally puts prices well above recent lows, although the overarching downtrend remains intact for now. First resistance sits at 148.79, the Nov 16 high. Vol band support remains below at 144.02 and 143.88 below.
JGBS: Ueda Confirmation Hearing To Headline This Week
JGB futures rebounded from session lows in the final overnight session of last week, taking their cues from U.S. Tsys & EGBs ahead of the weekend, to finish +2 vs. Tokyo settlement, just off their overnight session peak.
- BoJ Rinban operations headline today’s local docket, covering 1- to 10- & 25+-Year JGBs.
- Further out, Japanese PM Kishida’s nominee to succeed outgoing BoJ Governor Kuroda, Kazuo Ueda, will appear at a confirmation hearing in the lower house of parliament on Friday. The government has touted Ueda’s communication skills as a major factor behind his nomination for the role. A reminder that the Bank is expected to move away from ultra-loose policy settings in the post-Kuroda era and this hearing could give the first meaningful insight into Ueda’s preferences when it comes to policy settings.
