JAPAN DATA: Import Price Pressures May Build Given Oil Spike, Weaker Yen
The spike in oil prices, if sustained, is likely to feed through into higher Japan imports in coming...
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US TSYS: JGB Moves Do Little to Impact USTs, Two Way Flow in TYH6
US bond futures opened only modestly lower Monday, despite the leads from the JGB open in Japan. The 10-Yr bond future opened at 111-31+ and has traded in a range of 111-30+ to 112-02, -01 from Friday's close. TYH6 is near the mid-point of the upper resistance from the 50-day EMA at 112-05+ and downside resistance from the 200-day EMA at 112-02. Volumes are moderate to heavy Monday, indicating good two way flow.
Cash is seeing higher yields, with longer USTs underperforming.
- The 2-Yr is at 3.50%
- The 5-Yr is at 3.764% - up +0.3bps
- The 10-yr is at 4.216% - up +0.6bps
- The 30-Yr is at 4.861% - up +0.8bps
Looking ahead to Monday in the US, there is a US$89bn 13-week and a US$77bn 26-week auction.
JPY: USD/JPY Continues To Retrace Lower
USD/JPY continues to retrace lower, last close to session lows (156.32, dealing at 156.45/50 at the time of writing). Earlier we got to 157.76. No upside follow through to the earlier move, as markets assess the fallout from the election result. Broader risk trends are holding up, with precious metals and US equity futures in the green. Still, yen is outperforming on crosses like AUD/JPY, which was last back under 110.00, after getting to 110.79 earlier. We did have the FX jawboning earlier from the Chief FX Diplomat, but these moves look to reflect to some degree that a strong Takaichi victory was priced by FX markets.
CHINA: Central Bank Injects CNY38bn via OMO
Onshore media suggests that in the week ahead, leading into next week's Lunar New Year, the PBOC could inject significant liquidity. It began this week with modest injection as repo rates show signs of stabilization.
- The PBOC issued CNY113bn of 7-day reverse repo at 1.4% during this morning's operations.
- Today's maturities CNY75bn.
- Net liquidity injection CNY38bn.
- The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
- The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.47%, from prior close of 1.46%.
- The China overnight interbank repo rate is at 1.25%, from the prior close of 1.27%.
- The China 7-day interbank repo rate is at 1.47%, from the prior close of 1.47%.
