US TSYS: Strong Rebound for Yields as JGBs Stabilize

US bond futures are lower Monday, with the US 10-Yr down -04  at 112-12.  The move lower sees TYH6 below the 100-day EMA of 112-14+ with downside resistance now in the form of the 200-day EMA at 111-31.

Cash is weak also with yields +0.6 - 2.0bps higher across the curve as the long end underperforms.  

• The 2-Yr is up +0.6bps to 3.492%
• The 5-Yr is up +1.4bps to 3.709%
• The 10-Yr is up +2bps to 4.169%
• The 30-Yr is up +2bps to 4.847%

Tonight the focus for bond markets will be a US$86bn 13-week and US$77bn 26-week bill auction alongside a US$69bn 2-Year note auction. The last 2-Yr auction on November 25 drew a high yield of 3.489% and a bid to cover of 2.68 x, which was the highest of the previous three auctions.

Data wise tonight it is very quiet as markets wind down into the Xmas holidays.  Third-quarter GDP estimate and Consumer Confidence are scheduled for release later in the week.

Ongoing optimism surrounding artificial intelligence (AI) and data center demand which has driven the rally in technology shares across the region, re-emerged today with some key tech stocks up over 5%.    Chipmakers in Japan (e.g., Advantest) and South Korea (e.g., Samsung Electronics and SK Hynix) are leading the gains, recovering from prior concerns over capital expenditure and valuations.  Following the success of two recent AI / Tech IPOs, BBG is reporting that as many as four IPOs could be imminent in China following AI chipmaker Moore Threads Technology Co. saw its stock jump 425% on the first day of trading in Shanghai, followed by the 693% gain for MetaX Integrated Circuits Shanghai Co.’s listing.  The People's Bank of China (PBOC) maintained its key loan prime rates (LPRs) for a seventh consecutive month (1-year LPR at 3.0% and 5-year LPR at 3.5%) to support a still-struggling property sector and broader domestic demand as market reports that Vanke's fortunes remain unresolved.  In Japan stocks were strong despite BOJ Governor indicating that further rate hikes are coming, although the timing remains uncertain.  

• The NIKKEI is up +1.87% today at 50,431 and back above the 20-day EMA of 49,933 with key tech name Softbank Group up +4% today.  
• The KOSPI is up +1.72% as Samsung rose +3.1% and SK Hynix +5.3%
• China's major bourses are all positive today with the Hang Seng up +0.20%, CSI 300 up +0.79%, Shanghai up +0.65% and Shenzhen up +1.16%.  
• The NIFTY 50 finished strongly Friday but ended the week losing ground by -0.31%, only to regain those losses Monday with gains of +0.63%
• Both the FTSE Malay KLCI have done very little Monday with the FTSE near to where it opened and the JCI up a mere +0.19%.  

The BBDXY has had a range today of 1208.88 - 1210.13 in the Asia-Pac session; it is currently trading around {BBDXY Index}. The USD continues to probe the 1210 area to start the week. The move last week had more to do with the surge higher in USD/JPY than any real USD strength as the moves elsewhere in currencies and more importantly in metals attest to. Robin Brook made an important point on Friday, take out the JPY in the USD basket and the USD is falling a lot more than is being appreciated. On the day I still have very little conviction on direction, continue to watch for resistance again around the 1210 area and above here the more important 1213-1216 area where sellers should remerge initially. Can this 1204 area continue to provide support if not a move below here would target 1198-1200.

• EUR/USD -  Asian range 1.1706-1.1723, Asia is currently trading {EURUSD Curncy}. The pair continues to consolidate just above 1.1700. On the day, support remains toward 1.1675-1700 initially, a break below here could potentially signal a deeper pullback. While this support hold though it is skewed towards testing higher
• GBP/USD - Asian range 1.3372-1.3402, Asia is currently dealing around {GBPUSD Curncy}. The pair continues to chop around the 1.3400 area and is potentially starting to show the first signs of exhaustion. On the day, I suspect more range trading with support back toward 1.3285-1.3315 and resistance 1.3450-1.3500.
• Cross asset : SPX +0.25%, Gold $4395, US 10-Year 4.166%, BBDXY 1209, Crude Oil $57.00
• Data/Events : Italy PPI, Spain Trade Balance

Fig 1: EUR/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P