JGBS: Holding Gains Despite Hawkish BoJ Speak, Tokyo CPI On Friday

• RES 4: 132.56 High Feb 28 and a key resistance               
• RES 3: 131.72/132.03 High May 7 / High Apr 7 and the bull trigger     
• RES 2: 130.86 High May 9 Round number resistance 
• RES 1: 130.94 High May 23                     
• PRICE: 130.27 @ 05:54 BST May 26
• SUP 1: 129.49/13 Low May 22 / 15 and key short-term support             
• SUP 2: 129.02 Low Apr 10           
• SUP 3: 128.60 Low Apr 9 and a key support  
• SUP 4: 128.19 Low Mar 27 

The recovery in Bund futures that started May 15 suggests the move down between Apr 22 - May 15, has been a correction. A stronger resumption of gains would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. Initial resistance is Friday’s high of 130.94. Key short-term support to watch is 129.13, the May 15 low. A break would be bearish and mark a resumption of the recent bear cycle.

JGB futures are stronger, +31 compared to the settlement levels, after recovering much of the losses seen earlier in the session. Futures had closed Friday’s overnight session at +56.

• US equity-index futures have climbed in early Asian trading after President Donald Trump extended a deadline on aggressive European tariffs. Trump agreed to delay the date for a 50% tariff on goods from the European Union to July 9 from June 1.
• US tsy futures (TYM5) have weakened in today’s Asia-Pac session, with TYM5 at 109-27, -0-07+ from closing levels. Cash US tsys are closed today for Memorial Day.
• “Neel Kashkari said major shifts in US trade and immigration policy are creating uncertainty for the Fed to move on interest rates before September." (BBG)
• (Bloomberg) - "Long-term Japanese yields are set to climb further with JGB traders facing a 40-year debt auction, followed by Tokyo inflation data this week." (per BBG)
• Cash JGBs are 1-3bps richer across benchmarks with a flattening bias. The benchmark 30-year yield is 3.0bps lower at 3.023% versus the high of 3.204%. It was as low as 3.0% earlier in the session.
• Swap rates are 1-3bps higher with a flatter curve and swap spreads are wider.
• Tomorrow, the local calendar will see PPI data ahead of 40-year supply on Wednesday.

The BBDXY has had a range of 1207.08 - 1211.08 in the Asia-Pac session, it is currently trading around 1208.  President Trump agrees to an extension to July 9 for Europe.  https://x.com/TrumpDailyPosts/status/1926778871442972759. The EU is ready to advance talks and needs until July 9 to reach a good deal, Ursula von der Leyen said on X. https://x.com/vonderleyen/status/1926729529436913794.

• EUR/USD -  Asian range 1.1363 - 1.1419, Asia is currently trading 1.1410. EUR has traded higher and remained bid throughout the Asian session. What stood out from the price action on Friday was how well the EUR held up in the face of a potential 50% increase in tariffs, and it was again the USD that took the brunt of the impact. This clearly shows the market's current outlook and leans into the growing “sell America “ theme. 
• GBP/USD - Asian range 1.3524 - 1.3593, Asia is currently dealing around 1.3580. The GBP is breaking the Pivotal Weekly Resistance in the 1.3500 area, I would be weary considering it is in thin liquidity on an Asian Monday morning, with a US and European holiday. A sustained break though would signal a potential acceleration of the trend higher.
• USD/CNH - Asian range 7.1616 - 7.1824, the USD/CNY fix printed 7.1833. Asia is currently dealing around 7.1690. Sellers should be found on a bounce back towards the 7.2200 area again. Andreas Steno Larsen on x : "The elephant in the room USDCNH needs to go to 6.80 at least. https://x.com/AndreasSteno/status/1926115935200440525"

• Cross asset : SPX +1.07%, Gold $3350, US TYM5 109-27 , BBDXY 1208, Crude oil $61.76

  Fig 1: GBP/USD Spot Weekly Chart

  

  Source: MNI - Market News/Bloomberg