US TSYS: Narrow Ranges Persisting
Tsys are holding little changed from Wednesday's closing levels in early dealing on Thursday. Ranges have been narrow with little follow through on moves, there hasn't been any meaningful macro newsflow of note thus far. TYU3 deals at 112-29, -0-03, a 0-02+ range has been observed.
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JGBS: Futures Now Stronger After Trust Banks Buy Record Amount Of Super-Long JGBs
JGB futures reverse overnight weakness in early Tokyo trade on news that Japanese trust banks bought a record amount of super-long JGBs last month. JBU3 is currently dealing at 148.63, +14 compared to settlement levels, after closing post-Tokyo trade at -10.
- According to the latest data from the Japan Securities Dealers, trust banks, often seen as proxies to pension funds, purchased ¥1.27 trillion of debt with original maturities of more than 10 years and ¥938 billion of 10-year notes. (see link)
- Cash JGBs are richer across the curve beyond the 1-year zone with the curve flatter led by the 20-year zone (-1.8bp). The benchmark 10-year yield is 1.5bp lower at 0.385%, below the BoJ's YCC limit of 0.50%. The 5-year benchmark is 0.7bp lower at 0.073%, ahead of supply later in the week.
- The swap curve bull flattens with swap spreads tighter across the curve.
- The local data calendar has the final April Industrial Production readings, along with April Capacity Utilisation out later today. The final May Machine Tool Orders print is also due.
JPY: USD/JPY Above 142.00, Suzuki Reiterates FX Should Move In A Stable Manner
USD/JPY has broken above 142.00. We currently track just below highs, last in the 142.10/15 region. This is fresh highs for the year and we are just below 142.25, the Nov 21 2022 high. A move above that level then targets 142.51, 61.8% of the Oct 16 2022 - Jan 16 bear leg.
- Oct/Nov 2022 levels above 145.00 may beckon then.
- Yen weakness is in line with the firmer US yield tone in the first part of trade today, with cash bond markets re-opening after the long weekend (yields are 4.1 to 5.7bps firmer across the curve).
- Still, comments have crossed from FinMin Suzuki on FX markets. They are in line with recent rhetoric, with the Suzuki noting that the authorities are watching moves on a daily basis. This has helped USD/JPY move off session highs, albeit only modestly (the pair last 142.05/10).
AUD: AUD/EUR: Narrow Ranges Persist
AUD/EUR has observed narrow ranges in recent dealing with rallies capped above €0.63, and support below €0.6250.
- The pair is consolidating gains seen early in the month and sits ~5% above April's cycle lows. We last print at €0.6270/75.
- Bulls look to sustain a break of €0.63 which opens the 200-Day EMA (€0.6321). A break through here opens €0.6394 high from 27 February.
- On the downside bears target the 20-day EMA (€0.6219).
