JGBS: JGBs Eyeing 136.00 Downside Test, While 30yr JGB Near 100-day EMA Support
Oct-23 23:37
JGB futures finished up at 136.04, -.06 versus settlement levels. The broader global fixed income tone in markets was down on Thursday, as the oil price surge tempered expectations around yields breaking lower. Notably the 10yr US Tsy closed back around 4.00%. For JGB futures, downside focus will be whether we can break back under 136.00 and sustain this move. Recent lows rest at 135.89. Note the Oct 8 low is further south at 135.61. Key upside resistance, the Sep 8 high, at 137.30 remains firmly intact.
- The Sep Nationwide CPI printed close to market forecasts. We were 2.9% for headline and core, which was the consensus estimate. The core measure which excludes fresh food and energy printed at 3.0% (against a 3.1% forecast, with 3.3% prior for this print).
- In the cash JGB space, the 10yr JGB finished up yesterday at 1.67%, so still close to recent cycle highs around 1.70%. The 20-40yr tenors held softer trends though, the 30yr is now under its 20 and 50-day EMA support points, the 100-day isn't too far away at 3.07%, see the chart below.
- The 2/30s curve continues to flatten, last 215.4bps, fresh multi month lows.
- Later on, we get the preliminary Oct PMIs for Japan. Next week, the focus is on Thursday's BoJ outcome. The strong consensus is for a steady 0.50% policy rate.
Fig 1: 30yr JGB Yield Near 100-day EMA Support
Source: Bloomberg Finance L.P./MNI
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JGBS: Trading To Resume After Yesterday's Holiday
Sep-23 23:20
In post-Tokyo trade on Monday, JGB futures closed stronger, +8 compared to settlement levels.
- US tsys broke a four-day losing streak after Chair Powell did not really throw cold water on rate cut expectations and after Wall Street's winning streak came to an end.
- Fed speak elicited muted reactions. Even Chair Powell's outlook didn't deviate much, if at all, from last week's FOMC press conference, as "two-sided risks mean that there is no risk-free path."
- MNI JAPAN: LDP Candidates Support New Parties In Coalition, No Signal Of Which Ones. Speaking at a joint press conference earlier today, all five candidates for the presidency of the governing Liberal Democratic Party (LDP) voiced their support for the prospect of expanding the governing coalition beyond the LDP and its long-term partner, the centrist social-conservative Komeito party.
- * Bloomberg - "Japan's Takaichi Says More Bond Issuance May Become Unavoidable. Japan will need to rely on excess tax revenue to fight back against rising consumer prices, but issuing government bonds "could become unavoidable if the situation calls for it," said Sanae Takaichi, a frontrunner in the ruling Liberal Democratic Party's leadership race."
- Today, the local calendar will see S&P Global PMIs.
AUSSIE BONDS: Little Changed Ahead Of Aug CPI Due
Sep-23 23:12
ACGBs (YM flat & XM +1.5) are slightly richer.
- US tsys finished modestly richer and near late-session bests, gaining around Chairman Powell's speech as a block buy over 10k TYZ5 added impetus to move.
- Bloomberg - "Australia's Albanese to Meet With Trump in Washington on Oct. 20. "President Trump agreed to a meeting some time ago, we had another chat about it on the phone and we'll have a meeting in Washington DC on Oct. 20," Australian Prime Minister Anthony Albanese said at a press conference in New York."
- Cash ACGBs are ~1bp richer with the AU-US 10-year yield differential at +14bps.
- The bills strip little changed.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut in September is given a 4% probability, with a cumulative 25bps of easing priced by year-end.
- Today, the local calendar will see August CPI data.
- (Bloomberg Economics) "Australia's August CPI 1-2bps richer report is likely to show inflation holding firm near the top of the Reserve Bank of Australia's 2%-3% target band. We estimate annual CPI growth stayed at 2.8%, unchanged from July. The annual electricity price increase boosted the July reading, but this will be partially unwound by the federal government's subsidy in August."
MNI: UK JUN-AUG BRIGHTMINE MEDIAN PAY AWARDS +3.0% (VS +3.0% MAY-JUL)
Sep-23 23:01
- MNI: UK JUN-AUG BRIGHTMINE MEDIAN PAY AWARDS +3.0% (VS +3.0% MAY-JUL)
