JGBS: Richer After BoJ's GDP & CPI Forecast Downgrades
JGB futures are sharply higher but off session highs, +49 compared to settlement levels.
- As widely expected, the BoJ left its policy rate unchanged at 0.50%, which was a unanimous decision of 9-0 by the board.
- The economic outlook was downgraded though in terms of both lower GDP and inflation forecasts. It also notes prices and growth risks for the 2025 and 2026 fiscal years rest to the downside.
- The central bank retained its bias that if the outlook is realised it will raise rates further, but the central bank places a caveat on that given extreme uncertainties around the trade outlook.
- Cash US tsys are dealing ~2bps cheaper in today's Asia-Pac session. Today's US calendar will see Initial Jobless Claims, S&P Manf PMI and ISM Manf PMI.
- Cash JGBs are 1-5bps richer on the day across benchmarks out to the 20-year and 1-2bps cheaper beyond. The benchmark 10-year yield is 3.6bps lower at 1.282% versus the cycle high of 1.596%.
- Swaps have twist-steepened with rates 4bps lower to 1bp higher, pivoting at the 30-year.
- Tomorrow, the local calendar will see Jobless Rate, Job-To-Applicant Ratio, Monetary Base and Weekly International Investment Flow data alongside an enhanced liquidity auction for OTR 1-5-year JGBs.
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BOBL TECHS: (M5) Short-Term Bull Cycle Remains In Play
- RES 4: 119.040 High Feb 28 and a key resistance
- RES 3: 118.950 High Mar 4
- RES 2: 118.382 76.4% retracement of the Feb 28 - Mar 6 sell-off
- RES 1: 118.200 High Mar 31
- PRICE: 117.740 @ 05:47 BST Apr 1
- SUP 1: 117.470 20-day EMA
- SUP 2: 117.080 Low Mar 25 and a ey short-term support
- SUP 3: 116.800 Low Mar 17
- SUP 4: 116.470 Low Mar 12
Bobl futures traded to a fresh short-term cycle high yesterday, before retreating. The contract has breached 117.974, the 61.8% retracement of the bear leg between Feb 28 - Mar 6. The break strengthens the current bull cycle and paves the way for a climb towards 118.382, a Fibonacci retracement. On the downside, initial support to watch lies at 117.470., the 20-day EMA. Key short-term support is at 117.080, the Mar 25 low.
ASIA STOCKS: A Better Day for Stocks as China Leads the Rally.
China Vanke, often viewed as a bellwether for the property sector saw shares up +2.5% in Hong Kong despite missing earnings.
Following the lifting of a ban on short selling, global funds accounted for 90% of the short sales in stocks on the KOSPI on Monday according to exchange data.
Foreign outflows in Taiwan continue unabated and has seen over $3bn leave the market in the last five trading days.
A better day in general for Asian bourses as China’s markets performed well across the board, giving impetus to others.
- China’s Hang Seng lead the way rising +1.06%, gradually pushing it into positive territory over the last five days. The CSI 300 is up +0.29%, Shanghai Comp +0.59% and Shenzhen up +0.90%.
- Taiwan's TAIEX is up strongly despite the outflows, rising by +2.53% for its strongest day since early January.
- Following yesterday’s declines the KOSPI has roared today, rising by +1.94% spurred on by positive economic data releases.
- Having been closed yesterday, Singapore’s Straits Times is playing catch up on yesterday’s regional falls, down -0.20% whilst the Philippines is up for a second day by +0.54%.
- India’s NIFTY 50 has enjoyed a strong period of gains, but is giving back at this morning’s open, down -0.25%.
EURUSD TECHS: Trend Condition Remains Bullish
- RES 4: 1.1083 High Oct 2 2024
- RES 3: 1.1040 High Oct 4 2024
- RES 2: 1.0961 76.4% retracement of the Sep 25 ‘24 - Feb 3 bear leg
- RES 1: 1.0861/0955 High Mar 21 / 18 and the bull trigger
- PRICE: 1.0826 @ 05:58 BST Apr 1
- SUP 1: 1.0733 Low Mar 27 and a key short-term support
- SUP 2: 1.0656 50-day EMA and a short-term pivot level
- SUP 3: 1.0602 Low Mar 5
- SUP 4: 1.0548 50.0% retracement of the Feb 3 - Mar 18 bull run
The trend condition in EURUSD is bullish and recent weakness appears to have been a correction. MA studies are in a bull-mode position highlighting a dominant uptrend. 1.0733, the Mar 27 low, marks a key near-term support. A move through it would confirm a clear breach of the 20-day EMA and signal scope for a deeper correction towards the 50-day EMA at 1.0656. Key resistance and the bull trigger is 1.0955, the Mar 18 high.
