JAPAN DATA: Jan Services PPI As Expected, Sitting Higher Than Headline CPI

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• The key data release will be the Industrial Profits for December, where investors will look for signs that pressures from 'price involution' may be moderating.
• The CSI 300 has struggled year to date, despite onshore analysts revising upwards the outlook for earnings.
• The PBOC set the yuan's daily reference rate below 7 for the first time in over 2-years, potentially a sign of allowing further appreciation.
• The AI / tech euphoria seen in other markets remains more cautious for domestic investors with valuations less stretched.

• RES 3: 140.08 - High Jun 13  
• RES 2: 139.05 - High Aug 4 
• RES 1: 137.30 - High Sep 8 and key short-term resistance
• PRICE: 131.28 @ 15:54 GMT Jan 23
• SUP 1: 131.06 - 2.0% Lower Bollinger Band
• SUP 2: 130.66 - Low Jan 19
• SUP 3: 130.41 - 1.0% 10-dma envelope  

JGBs came under intense selling pressure Tuesday on the back of weak demand at a 20y JGB auction and increased scrutiny of Japan’s fiscal health. Resultantly, prices traded to new pullback and cycle lows. This affirms the firm downtrend that’s dominated prices since mid-September, and prices will need to challenge resistance before signaling any broader reversal. The Lower Bollinger Band at 131.15 has been breached, with 130.55 envelope support below. 

US bond futures have opened stronger Monday, dragged higher by the very strong close by JGBs on Friday and the potential spill over risks from further JGB market upheaval.  All major US bond futures are up with the 10-Yr up by +05+ to 111-27+ and towards the topside resistance via the 200-day EMA of 112.

Cash is quiet with most maturities relatively unchanged from Friday.  

• The 2-Yr is at 3.596%
• The 5-Yr is at 3.826%
• The 10-Yr is at 4.227%
• The 30-Yr is at 4.828%

Ahead of this week's FOMC, tonight's focus will be the US$89bn 13-week, US$77bn 26-week bill auction as well as the U$69bn 2-Yr auction.  

Data -wise in the US Monday, investors will watch the durable goods November prelim release, the Dallas Fed MFG activity for January as well as the Atlanta Federal Reserve will provide its next GDPNow update on its Q4 2025 real GDP growth estimate at some point during the day