AUSSIE BONDS: Holding Richer On A Subdued Data-Light Session
ACGBs (YM +5.0 & XM +5.0) remain stronger after dealing in narrow ranges in today's data-light Sydney session.
- (MNI) There has been a moderate improvement in housing affordability with prices soft in Q4 and Q1, a strong rise in Q1 disposable income and mortgage rates lower, which should fall further with more RBA easing expected.
- However, affordability remains 40% below trend, only slight progress from the worst at 42.8% in Q3 2024. Structural issues in the sector persist.
- Cash US tsys are ~2bps richer in today's Asia-Pac session with Middle East tensions in focus.
- Cash ACGBs are 5bps richer with the AU-US 10-year yield differential at -18bps.
- The bills strip has bull-flattened, with pricing +1 to +6.
- RBA-dated OIS pricing is 1-7bps softer across meetings today. A 25bp rate cut in July is given an 82% probability, with a cumulative 76bps of easing priced by year-end.
- Today, the local calendar was empty. A speech from RBA Jacobs, Head of Domestic Markets Department - Australia's Bond Market in a Volatile World - at the Australian Government Fixed Income Forum, Tokyo (1720 AEST).
- Tomorrow, the local calendar will be empty.
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GBPUSD TECHS: Monitoring Support At The 50-Day EMA
- RES 4: 1.3550 High Feb 24 ‘22
- RES 3: 1.3510 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
- RES 2: 1.3402/3444 High May 6 / High Apr 28 / 29 and the bull trigger
- RES 1: 1.3323 High May 9
- PRICE: 1.3198 @ 06:06 BST May 13
- SUP 1: 1.3140 Low May 12
- SUP 2: 1.3087 50-day EMA
- SUP 3: 1.3041 Low Apr 14
- SUP 4: 1.2968 Low Apr 11
GBPUSD traded lower Monday as the pair extended the correction that started Apr 29. The 20-day EMA has been breached. Furthermore, a minor head and shoulders formation on the daily chart highlights a reversal and reinforces the likelihood of a corrective pullback near-term. Key support to watch is 1.3087, the 50-day EMA. The bull trigger is unchanged at 1.3444, the Apr 28 / 29 high. A break of this level would resume the uptrend.
JGBS: Twist-Flattener After Solid 30Y Auction, PPI Data Tomorrow
JGB futures are holding sharply weaker and near session lows, -86 compared to settlement levels, despite a solid post-auction rally at the long end of the curve.
- The 30-year JGB auction low price aligned with dealer expectations per a Bloomberg survey. Moreover, the cover ratio rose to 3.0739x from 2.9582x, and the auction tail narrowed significantly to 0.30 from 0.75 (the longest since 2023).
- (MNI, ICYMI) Several Bank of Japan's board members expressed caution about raising interest rates at the April 30-May 1 meeting. The summary did not offer any hint regarding the pace or timing of rate increases, reflecting the board's cautious stance at the meeting, which led to a hold on the 0.5% policy rate.
- BoJ Governor Uchida reiterated the central bank’s stance to raise interest rates once its economic outlook is realised in Parliament today.
- Cash US tsys are 1-2bps richer in today's Asia-Pac session after yesterday's heavy session sparked by news that the US and China agreed to pause their retaliatory reciprocal tariffs for 90 days.
- Cash JGBs are 1-2bps cheaper across benchmarks out to the 10-year but 7-8bps richer beyond.
- Swap curve has twist-flattened with rates 3bps higher to 5bps lower.
- Tomorrow, the local calendar will see PPI data alongside BoJ Rinban Operations covering 1-3-year and 5-25-year JGBs.
BOBL TECHS: (M5) Short-Term Bear Cycle
- RES 4: 120.20 High Dec 12 ‘24 (cont)
- RES 3: 119.960 High Apr 7 and the bull trigger
- RES 2: 119.600/780 High May 7 / High Apr 22
- RES 1: 118.722/119.068 50- and 20-day EMA values
- PRICE: 118.260 @ 05:44 BST May 13
- SUP 1: 118.240 Intraday low
- SUP 2: 118.105 50.0% retracement of the Mar 6 - Apr 7 bull run
- SUP 3: 117.680 Low Apr 9 and a key support
- SUP 4: 117.600 Low Mar 28
A bull cycle in Bobl futures remains intact, however, for now a strong bearish corrective phase is in play and Monday’s sell-off strengthens a near-term bearish theme. The contract has traded through the 50-day EMA and cleared 118.543, 38.2% of the Mar 6 - Apr 7 bull run. This exposes 118.105, the 50.0% retracement. Initial resistance to watch is 119.068, the 20-day EMA. A break would signal a potential reversal.
