US TSYS: Marginally Pressured
Tsys have ticked lower in recent dealing, Asia-Pac participants are perhaps focusing on the more hawkish elements of yesterday's July FOMC minutes. Cash tsys sit 2-3bps cheaper across the major benchmarks. TYU3 deals at 109-11, -0-07, a touch off the base of the 0-10+ range.
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US TSYS: Gains Marginally Extend
Early gains in Tsys have marginally extended in recent dealing as a bid in JGBs spilled over into the wider space. Little macro news flow has crossed this morning, the USD is flat and e-minis are a touch firmer. This leaves cash tsys 1-2bps richer across the major benchmarks, light bull steepening is apparent. TYU3 deals at 112-22+, -0-00+, a touch off the top of the 0-03+ range observed thus far.
JGBS: Futures Higher After Holiday, Cash JGBs Dealing Mixed
JGB futures are richer, +9 compared to settlement levels, after returning from yesterday’s holiday.
- JGB futures faltered again on Friday, cracking support at 147.34 to accelerate a brief move lower, according to MNI’s technicals team. Markets were content to buy on dips, helping move markets back toward flat ahead of the close. This mirrored the strength in US bond markets following the soft CPI, helping keep the upside impetus intact for now. Key resistance lies ahead at 149.21/53, highs from May and March. Clearance of these levels would highlight an important break.
- JGB futures have a downside bias into the Japan inflation report due on Friday, according to Bloomberg. (See link)
- Cash JGBs have opened mixed with yield movements bounded by 0.7bp lower (7-year) to 1.1bp higher (30-year). The benchmark 10-year yield is 0.1bp higher at 0.482%, below the BoJ's YCC limit of 0.50%, but just shy of its highest level in three months.
- The swaps curve has bull flattened with rates flat to 0.9bp lower. Swap spreads are wider out to the 5-year and wider beyond.
- On the data front we have the tertiary activity index for May on tap later (market consensus is for a gain of 0.4%, versus 1.2% prior).
AUD: AUD/GBP: Supported At £0.52
After a recovery from cycle lows last week was capped at the 20-Day EMA, AUD/GBP was supported at £0.52 handle as weaker than forecast Chinese GDP weighed on the AUD. Improving risk sentiment in yesterday's NY session aided a recovery off session lows.
- The pair is little changed thus far today and prints at £0.5210/15 and sits ~1% below Thursday's post US-CPI high.
- On the downside bears first look to break cycle lows at £0.5156, this opens the £0.50 handle and the March 2020 low at £0.4795.
- Bulls look to first break the 20-Day EMA (£0.5241). From here they can target the high from 23 June (£0.5309), then the high from 20 June (£0.5359) and the 200-Day EMA (£0.5453).
