US-JAPAN: Kato - Japan's Large US Tsy Holdings A Potential Negotiating Tool

In local morning trade, NZGBs are 3bps richer after a decent NY session for US tsys ahead of Liberation (tariff) Day announcements as accounts squared positions ahead of Wednesday afternoon's announcement from the White House (1600ET est).

• There was early FI support after lower-than-expected JOLTS job openings, quits and layoffs higher-than-expected. ISMs mixed with Mfg, new orders and employment lower-than-expected, while prices paid jumped.
• Washington Post reports that "White House aides have drafted a proposal to impose tariffs of around 20 per cent on at least most imports to the United States, three people familiar with the matter said".
• The WSJ notes: "The U.S. Trade Representative's office is preparing a third option of across-the-board tariff on a subset of nations that likely would not be as high as the 20% universal tariff option, according to people with knowledge of the plans."
• NZ home-building approvals rose 0.7% m/m in February.
• Swap rates are 2-4bps lower, with the 2s10s curve flatter.
• RBNZ dated OIS pricing is little changed. 24bps of easing is priced for April, with a cumulative 72bps by November 2025.
• The local calendar will show CoreLogic Home Value and ANZ Commodity Price data tomorrow.

• RES 3: 97.190 - High May 5 2023
• RES 2: 96.730/932 - High Sep 17 / 76.4% of Mar-Nov ‘23 bear leg
• RES 1: 96.370 - High Mar 31 
• PRICE: 96.360 @ 15:30 GMT Mar 01
• SUP 1: 95.900 - Low Jan 14 
• SUP 2: 95.760 - Low 14 Nov ‘24
• SUP 3: 95.480 - Low Jan 11 2023 and a major support 

Aussie 3-yr futures are again pressing toward new contract highs - clearing resistance on the continuation contract. A close at current or higher levels opens 96.730, the Sep 17 ‘24 high. On the downside, a stronger reversal lower from current levels would signal a resumption of a downtrend. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low.

Headlines crossed a short while ago from the WSJ around a potential new tariff option being prepared by the USTR for Trump. 

• The WSJ notes: "Trump's team in recent days has considered imposing a 20% universal tariff on virtually all imports, versus a reciprocal plan that would apply different tariffs to different countries. But the U.S. Trade Representative's office is preparing a third option-an across-the-board tariff on a subset of nations that likely would not be as high as the 20% universal tariff option, according to people with knowledge of the plans." See this link for more details.
• This follows overnight reports from Tuesday: The Washington Post reports that "White House aides have drafted a proposal to impose tariffs of around 20 percent on at least most imports to the United States, three people familiar with the matter said,".
• Also from the White House: "White House Press Secretary Karoline Leavitt has indicated to reporters that President Donald Trump’s reciprocal tariffs will be “effective immediately” following Trump’s White House Rose Garden announcement tomorrow, expected to take place around 16:00 ET 21:00 BST."