CROSS ASSET: Risk Off In Equities/Crypto, Eminis Near 20-day EMA Support
Risk off evident in the equity space earlier, has accelerated somewhat in recent dealings. US futures sit just up from session worst levels. Eminis last off around 0.80%, Nasdaq futures down 1.25% (we were off 1% and 1.5% respectively at the lows). The session started off poorly following late Oracle news from Wednesday's US session. Via IBD: "Oracle earnings topped fiscal Q2 but revenue came in short. Capital spending was significantly higher than expected in Q2 and Oracle hiked full-year capex plans. Nvidia stock fell slightly late after Oracle's Larry Ellison said the tech giant has adopted "chip neutrality," buying Nvidia chips but also will use other options if customers prefer."
- Crypto weakness has also been a feature in recent dealings, Bitcoin back under 90k. This has likely added some pressure at the margins to broader risk trends, with intra-day swings in US equity futures and Bitcoin still reasonably well correlated.
- This is unwinding the post FOMC risk rally. Eminis are back near the 20-day EMA support point, although this hasn't been a strong inflection point for futures in recent months.
- In the FX space, AUD/JPY is down around 0.65%, last close to 103.50 (with the softer earlier jobs data weighing on A$ performance as well). AUD/USD is back under 0.6650.
- US yield losses are also a little larger but not beyond 2bps at this stage. The 10yr yield is close to 4.13%.
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JGBS AUCTION: 30Y Supply Faces A Similar Yield But A Flatter Curve
The Japanese Ministry of Finance (MoF) will today sell Y700bn of 30-Year JGBs. The MoF last sold 30-year debt on 7 October 2025.
- This month’s 30-year JGB auction features an outright yield 20-25bps below its cyclical high, approximately the same level as last month’s issuance.
- The 10s30s yield curve is around 15bps flatter than the previous auction and 25bps below its cycle peak at 170bps.
- On a relative value basis, the 30-year bond is at a richer valuation versus last month, based on the 20-/30-/40-year butterfly spread. Nevertheless, the 30-year is still holding some of the dramatic cheapening seen in May, which took the 30-year to its most discounted level in over 20 years.
- Investor sentiment toward longer-dated global bonds remains uncertain.
- Against this backdrop, today’s 30-year auction will serve as a real test of investor appetite. Ultra-long maturities remain a soft spot in the market, and their performance will be key in determining whether recent volatility continues.
- Results are due at 0335 BST / 1235 JT.
JGBS AUCTION: Poll: 30-Year JGB Auction
*JAPAN 30Y GOVT BOND AUCTION MAY HAVE 100.45 LOWEST PRICE: POLL - BLOOMBERG
CHINA: Bonds Up on Liquidity Injection
- The biggest liquidity injection in a week has got bonds moving today with futures up and the 10-Yr marginally lower.
- The 10-yr future is up +0.05 to 108.53, above all major moving averages. The 20-day EMA is below at 108.38.
- The 2-Yr future is up +0.01 at 102.47, near to the 200-day EMA of 102.47.
- The 10-Yr CGB is down down by -0.5bps in yield to 1.80%, having edged up into the close yesterday.
