GLOBAL POLITICAL RISK: Trump States He Views War As Being Very Close To Over

In post-Tokyo trade on Friday, JGB futures closed sharply lower, -48 compared to settlement levels, after US tsys finished Friday's session marginally mixed, with a steepening bias.

• US GDP annualized q/q was lower than expected as are durable goods orders, other metrics were largely in-line. Markets reacting positively to latest headline re: France & Italy talking to Iran re: safe passage through Hormuz Straight, this after India tanker made safe passage earlier.
• "Trump said he hoped China, France, Japan, South Korea and the UK would send warships to escort vessels through Hormuz. Japan said any decision to send military vessels would face "high hurdles." - BBG
• Bloomberg - "It's the Length of Iran War That Matters for Bonds. As the war in the Persian Gulf continues though, the risk is the high price of oil spills over into other asset classes and, worse, into inflation expectations. So the longer this goes on, the more inflationary it is and the more ripple effects for financial markets."
• (Bloomberg) “The Japan 2-year to 10-year yield curve will remain steady at 96 basis points by the end of the second quarter, based on Bloomberg surveys of market forecasts.”
• Today, the local calendar will be empty.

ACGBs (YM -3.0 & XM -2.5) are weaker after US tsys finished Friday’s session marginally mixed, with a steepening bias.

• US GDP annualized q/q was lower than expected as are durable goods orders, other metrics were largely in-line. Markets reacting positively to latest headline re: France & Italy talking to Iran re: safe passage through Hormuz Straight, this after India tanker made safe passage earlier.
• UofM sentiment better than expected while 1Y inflation expectations holds steady to prior (lower than estimate), 5-10Y inflation exp dips slightly. JOLTS job openings surge higher, quits level declines but slightly higher than expected. Layoffs retreated.
• US’s Monday Data Calendar: Empire Mfg, IP/Cap-U, NAHD Housing Mkt Index.
• Cash ACGBs have twist-steepener with the AU-US 10-year yield differential at +69bps.
• The bills strip is flat to -2 across contracts.
• Today, the local calendar will be empty ahead of tomorrow’s RBA meeting.
• Going into the policy decision, RBA-dated OIS pricing implies a 69% probability of a 25bp hike, up from 35% in early March.
• RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising to 161% by June and 287% by December 2026.
• This week, the AOFM plans to sell $1000mn of the 4.25% 21 March 2036 bond on Wednesday.

Bloomberg Finance LP

• RES 3: 95.568 - 61.8% retracement Oct’ 25 - Jan’ 26 downleg
• RES 2: 95.465 - 50.0% retracement Oct’ 25 - Jan’ 26 downleg
• RES 1: 95.425 - High Dec 1 ‘25 (cont)
• PRICE: 94.970 @ 15:58 GMT Mar 13
• SUP 1: 94.960 - Low Mar 12
• SUP 2: 94.965 - Low Nov 1 ‘23 (cont)
• SUP 3: 94.256 - 1.0% 10-dma envelope

Aussie 10-yr futures stepped lower to break - briefly - below 95.000 at the beginning of this week, but prices have rallied since. Nonetheless, recent weakness has confirmed the upleg posted off the late January lows as corrective in nature. That said, recent price action concludes the bear leg after the failed break above the 100-dma at the end of February. MA studies remain in a bear-mode position highlighting a downtrend.