INDIA: PMI's Continue to Power Ahead

As China returns from a break yesterday, an unexpected weak CAIXIN manufacturing PMI drove markets higher as investors speculate about the potential for further policy intervention.  With Korea closed, all eyes were on China's major bourses with some of the beaten down EV related stocks having a better day in Hong Kong  (BYD +1.7%, Li Auto +6.4%)

• With the Hang Seng leading the way with a rise of +1.13%, onshore bourses performed also with the CSI300 +0.48%, the Shanghai Composite +0.48% and Shenzhen up +0.57%.
• The FTSE Malay KLCI returned after being closed yesterday to be down by -0.32% and mark six successive days of falls.  
• The Jakarta Composite did very little and hovered around where it opened after its biggest fall in four weeks yesterday.  
• The FTSE Straits Times in Singapore is down -0.03% whilst the PSEi in the Philippines is up +0.45%.  
• The NIFTY 50 is in line for three straight days of fall, losing ground by -0.20% today.  

• RES 4: 1.1625 1.500 proj of the Feb 28 - Mar 18 - Mar 27 price swing
• RES 3: 1.1608 High Nov 9 2021
• RES 2: 1.1573 High Apr 21 and the bull trigger
• RES 1: 1.1455 Intraday high 
• PRICE: 1.1423 @ 06:10 BST Jun 3
• SUP 1: 1.1307 20-day EMA
• SUP 2: 1.1182/1.1065 50-day EMA and a pivot level / Low May 12
• SUP 3: 1.1026 38.2% retracement of the Feb 3 - Apr 21 bull cycle
• SUP 4: 1.0943 Low Apr 10

A bullish theme in EURUSD remains intact and Monday’s gains and fresh short-term cycle high reinforce current conditions. The breach of  1.1419, the May 26 high, confirms a resumption of the trend and opens 1.1573, the Apr 21 high and bull trigger. Support to watch lies at 1.1182, the 50-day EMA. A clear break of this average would undermine the bull theme and signal scope for a deeper retracement. This would open 1.1065, the May 12 low.

JGB futures are stronger, +10 compared to settlement levels, after gapping higher following a strong 10-year auction. 

• The 10-year JGB auction delivered a low price above expectations, according to the Bloomberg dealer poll. Moreover, the cover ratio increased to 3.6627x from 2.5440x, and the tail shortened to 0.01, the shortest since March 2023, from 0.18.
• BoJ Governor Ueda, speaking in parliament, emphasised that trade uncertainties remain extremely high and are unlikely to ease even after tariff issues are resolved. He noted that the BoJ's baseline economic scenario could change significantly due to external conditions.
• He also said the BoJ will review its bond tapering plans at the next policy meeting on June 17, taking into account feedback from bond market participants.
• Note as well Governor Ueda will speak later today at 4:50pm local time.
• Cash US tsys are ~1bp richer in today's Asia-Pac session after yesterday's sell-off.
• Cash JGBs are 1bp cheaper to 2bps richer across benchmarks, with the belly leading. The benchmark 10-year yield is 2.3bps lower on the day at 1.490%.
• Swap rates are flat to 1bp lower.
• Tomorrow, the local calendar will see Jibun Bank Composite and Services PMIs.