EMISSIONS: Irelalnd Projects To Miss Both National & EU 2030 Emissions Target

Late on Friday J.P.Morgan recommended “initiating 30-Year swap spread wideners, paired with a risk weighted short in S&P 500 futures.”

• This comes after they turned “bullish on swap spreads given fair value considerations and tariff progress but recommend hedging with S&P 500 futures given the recent correlation of spreads to equities since early April”.

• The relatively stable and more constructive tone for risk sentiment last week weighed on the low yielding currencies, helping the likes of USDJPY to extend its corrective cycle. The pair rallied near to 3% from the lows as we approached the Friday close, with a brief test of 144 capping the topside for now.
• While a notable recovery, spot remained shy of initial resistance, which now comes in at 144.47, the 20-day EMA. Overall, moving average studies are in a bear-mode position highlighting a dominant downtrend. As such, USDJPY has been edging lower across the European morning on Monday, printing fresh session lows below 143.30 at typing.
• Goldman Sachs see USDJPY falling to 135 over the next 12 months, with risks skewed towards getting to (and below) that level much earlier. But given that equities still look vulnerable to nearer-term downside and the speed of the Dollar sell-off leaves it susceptible to shorter-term swings, GS prefer to be short AUDJPY tactically.
• As a reminder, the BOJ is expected to keep its 0.5% policy interest rate unchanged this week, as policymakers monitor the economic and inflationary impact of recent U.S. trade policies and market volatility. Overnight, Japan’s top currency diplomat Mimura confirmed there were no talks about FX target held during US-Japan discussions.

• +6,500 FVM5 108-19.25, buy through 108-19 post time offer at 0805:45ET, DV01 $266,500. The 5Y contract trades 108-19.25 last (-.75).