GILT TECHS: (M5) Impulsive Sell-Off

• MNI: UK MAR CLAIMANT CHG +18700
• UK MAR CLAIMANT RATE +4.7%
• UK FEB AVE WEEKLY EARNINGS +5.6% YY
• UK FEB AVE WEEKLY EARNINGS EX-BONUS +5.9% YY

• RES 4: 165.43 High Nov 8        
• RES 3: 164.90 High Dec 30 ‘24 and a key medium-term resistance   
• RES 2: 164.55 High Jan 7
• RES 1: 163.55/164.19 High Apr 14 / High Mar 18 and the bull trigger 
• PRICE: 162.39 @ 06:59 GMT Apr 15 
• SUP 1: 161.03/158.30 50-day EMA / Low Apr 7 and key support   
• SUP 2: 157.02 76.4% retracement of the Feb 28 - Mar 18 bull cycle  
• SUP 3: 155.60 Low Low Mar 4  
• SUP 4: 154.80 Low Low Feb 28  

Recent weakness in EURJPY appears corrective and the strong rally from the Apr 7 low reinforces a bullish theme. Key short-term support has been defined at 158.30, the low on Apr 7. A break of this level is required to signal scope for a deeper retracement. This would open 157.02, a Fibonacci retracement. For bulls, a continuation higher would expose 164.19, the Mar 18 high and the bull trigger. A break of this hurdle would resume the uptrend.

JGB futures are weaker and hovering near session lows, -56 compared to settlement levels.

• With the local calendar light today, the key domestic driver was the poor 20-year auction. The 20-year JGB auction delivered poor results across key metrics. The low price underperformed dealer forecasts, which were set at 100.40 according to a Bloomberg poll. Moreover, the cover ratio decreased to 2.9639x from 3.4594x in the previous auction and the auction tail lengthened dramatically to 0.34 from 0.20.
• This result came despite the 20-year auction offering a cycle-high outright yield and a 10/20 curve at its steepest since 1999.
• Cash JGBs are weaker across the curve out to the 7-year tenor, with yields rising 4–6bps. The benchmark 10-year yield is up 2bps at 1.362%, well below the cycle high of 1.596%.
• Further out the curve, performance is mixed: the 20-year and 30-year bonds are 6bps and 3.5bps richer, respectively, while the 40-year underperformed, with yields 10bps higher.
• The swaps curve has twist-flattened, with rates 4bps higher to 9bps lower.
• Tomorrow, the local calendar will see Core Machine Orders data alongside BoJ Rinban Operations covering 1-10-year and 25-year+ JGBs.