JGBS: Little Changed But Weaker After Tepid Demand At Today's 10Y Auction
JGB futures are stronger, +15 compared to settlement levels.
- Japanese bond futures trimmed earlier gains after a key measure of demand at today’s 10-year auction fell to its lowest since May, though they remain slightly higher amid a global bond rally.
- Demand at Japan’s 10-year government bond auction was subdued, as investors weighed the risk of a near-term BOJ rate hike despite the central bank’s cautious stance, while fiscal concerns also dampened sentiment. The average bid-to-cover ratio declined to 2.9734x from 3.3356x at the previous auction in October. Moreover, the low price failed to meet expectations at 100.34, according to the Bloomberg dealer poll. However, the tail shortened to 0.13 from 0.19.
- Cash JGBs are 1bp richer to 1bp cheaper, with a steepening bias. The benchmark 10-year yield is 0.2bp lower at 1.670% versus the cycle high of 1.705%.
- Swap rates are flat to 1bp lower.
- Tomorrow, the local calendar will see Cash Earnings, S&P Global Composite & Services PMIs and Tokyo Avg Office Vacancies data.
Source: Bloomberg Finance LP
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MNI: MNI BOJ: 8 OUT OF 9 JAPAN REGIONS KEEP ECON VIEW FROM JULY
- MNI BOJ: 8 OUT OF 9 JAPAN REGIONS KEEP ECON VIEW FROM JULY
- MNI BOJ: 1 OUT OF 9 JAPAN REGIONS CUT ECON VIEW FROM JULY
BUND TECHS: (Z5) Corrective Cycle Still In Play
- RES 4: 129.50 High Aug 5
- RES 3: 129.44 High Sep 10 and key short-term resistance
- RES 2: 129.13 High Sep 17
- RES 1: 128.84 61.8% retracement of the Sep 10 - 25 bear leg
- PRICE: 128.44 @ 05:42 BST Oct 6
- SUP 1: 128.24/127.88 Low Oct 1 / Low Sep 25
- SUP 2: 127.61 Low Sep 3 and the bear trigger
- SUP 3: 127.46 1.00 proj of the Aug 14 - 15 - 28 price swing
- SUP 4: 127.13 1.236 proj of the Aug 14 - 15 - 28 price swing
Bund futures are holding on to the bulk of their latest gains. The recent climb appears corrective. Key support and the bear trigger lies at 127.61, the Sep 3 low. Clearance of this level would confirm a continuation of the medium-term bear cycle. For bulls, a clear reversal higher would refocus attention on key resistance at 129.44, the Sep 10 high. First resistance is 128.84, 61.8% of the Sep 10 - 25 bear leg.
THAILAND: Rate Cut Likely On Weak Growth & Disappointing September CPI
September Thai inflation was lower than expected with headline printing at -0.7% y/y after -0.8% and core at +0.65% y/y following August’s +0.8%. The Bank of Thailand decision is announced Wednesday, the first with new pro-growth Governor Vitai, and it is widely forecast to cut rates 25bp to 1.25%. The soft September CPI print along with lacklustre growth reinforces those expectations.
- Core inflation was its lowest in just over a year despite 100bp of easing begun in October 2024 as domestic growth remains weak. Government energy subsidies and lower food prices from good harvests pushed headline into negative territory where it has been for six straight months.
- Consumer data have generally been soft with August with consumer confidence falling to its lowest since December 2022, July private consumption down 0.3% y/y and August tourist arrivals contracting 12.8% y/y. Q2 real consumption growth slowed to 2.1% y/y from 2.5%. Recent political instability has been unhelpful but the new government is looking at ways to support households although it has also promised new elections.
- There was downward pressure on core inflation from clothing, housing, and personal & medical care.
Thailand CPI y/y%
Source: MNI - Market News/LSEG
