UK: MNI UK Inflation and Labour Market Insight: April 2025 Release

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• Bank Indonesia (BI) meets on Wednesday and is expected to keep rates steady at 5.75% given the continued weakness in the rupiah but it is a close call with BI wanting to support growth especially considering the negative impact of heightened uncertainty on global growth from US trade policy. 10 out of 36 respondents on Bloomberg are forecasting a 25bp rate cut.
• Rupiah weakness, especially its underperformance relative to other Asian currencies and response to equity volatility, is likely to worry BI, especially given the increase in portfolio outflows which drove a drop in FX reserves.
• BI has a number of policy tools. It has used macroprudential measures to support growth and lending for some time and has money market deepening instruments and intervenes in the market to manage the currency. 

• RES 4: 130.40 Low Feb 19               
• RES 3: 129.96 High Mar 5     
• RES 2: 129.41 Low Jan 14 
• RES 1: 128.33/129.15 High Mar 10 / 20-day EMA                   
• PRICE: 127.28 @ 05:24 GMT Mar 18
• SUP 1: 126.53 Low Mar 11      
• SUP 2: 126.28 2.618 proj of the Feb 5 - 19 - 28 price swing            
• SUP 3: 126.00 Round number support
• SUP 4: 123.36 3.00 proj of the Feb 5 - 19 - 28 price swing 

Bund futures continue to trade inside a range and remain in consolidation mode for now. A bearish trend theme remains intact. A recent impulsive sell-off signals scope for an extension towards 126.28 next, a Fibonacci projection. Further out, 126.00 is also within range. Note that the contract is still in oversold territory, a recovery would allow this condition to unwind. Initial firm resistance to watch is seen at 129.41, the Jan 14 low.

JGB futures are weaker, -8 compared to settlement levels, after giving up early strength.

• Today, the local calendar has been empty, with the Tertiary Industry Index and Tokyo Condominiums for Sale data due later.
• Nevertheless, the focus remains on tomorrow’s BoJ Policy Decision. The BoJ is expected to keep its policy rate at 0.50% in March, with no urgency for another hike after its January increase.
• Analysts expect a gradual rate hike to 0.75% by July or September and 1.0% by early 2026, depending on SME wage trends.  Market pricing reflects uncertainty, with only half of a 25bps hike factored in for June and a full hike not priced until October. (see MNI BoJ Preview here)
• Cash US tsys are 1-2bps richer in today’s Asia-Pac session. The focus is on Wednesday’s FOMC decision. The majority of analysts expect the FOMC to leave its Dot Plot funds rate medians unchanged in March compared with the December meeting.
• Cash JGBs are little changed across benchmarks out to the 30-year and 1.5bps cheaper beyond. The benchmark 10-year yield is 0.4bps higher at 1.517% versus the cycle high of 1.58%.
• Swap rates are 1-4bps higher out to the 30-year and flat beyond. Swap spreads are wider out to the 30-year.