FED: US TSY TO SELL $50.000 BLN 52W BILL MAR 17, SETTLE MAR 19

Downside in 10-year Bund yields has stalled a little around the 2.80% level, keeping the broad 2.80-2.90% range seen since the middle of December intact for now. Bunds face several cross currents this year, with well-documented domestic fiscal/issuance risks potentially offset by lingering geopolitical uncertainty and shifting investor demand patterns (e.g. away from 30-year maturities and towards the 10-15-year segment). Meanwhile, the ECB outlook is broadly steady, with rates set to be in a “good place” at 2% for some time. 

• Today’s 3.5bp decline has come despite a heavy sovereign and corporate supply calendar (the EU’s E11bln dual tranche syndication has just priced). Bunds have largely taken cues from global peers, with JGBs stabilising overnight, Gilts benefitting from some near-term political reprieve and USTs supported by a soft retail sales report.
• Earlier today, we highlighted some analyst views suggesting CTA reaction functions were skewed towards fixed income buying, which may be another factor supporting the pullback in global yields.
• Tomorrow’s Eurozone calendar includes syndications from France (30Y) and Slovakia (20Y), alongside conventional issuance from Greece, Germany and Portugal. In data, the ECB’s latest wage tracker is released. President Lagarde noted in last Thursday’s press conference that “Negotiated wage growth and forward-looking indicators, such as the ECB’s wage tracker and surveys on wage expectations, point to a continued moderation in labour costs. However, the contribution to overall wage growth from payments over and above the negotiated wage component remains uncertain.”
• The US labour market report remains the primary global  market focus tomorrow. 

Figure 1: 10-year Bund Yields (Source: Bloomberg Finance L.P)

Co-leader of the regionalist libertarian Japan Innovation Party (Ishin), Hirofumi Yoshimura, has said that "Discussions on constitutional reform should be accelerated," following the landslide win for PM Sanae Takaichi's conservative Liberal Democratic Party (LDP) in the 8 Feb general election. Yoshimura said Ishin and the LDP have already established a consultation body on constitutional reform (during the two parties' several months in gov't together following Takaichi's election as PM in October 2025). 

• Yoshimura said, "We would like to tackle head-on the issue of the Self-Defense Forces, particularly in relation to Article 9 of the Constitution". It is Article 9 that sees Japan renounce the right of belligerency, prohibits it from settling international disputes using force, and bars the establishment of a standing armed forces.
• Even with a two-thirds majority in the House of Representatives, the LDP-Ishin coalition is still well short of a two-thirds majority in the House of Councillors, and elections are not due in that chamber until 2028. This would require significant concessions to the opposition on other issues, or a watering down of any proposals to gain other parties' support. It would then face a referendum. Polls show reform of Art. 9 as a low-level priority for most voters, with a sizeable pacifist section of the population opposed.
• For China, reform would be viewed as overtly aggressive and risk an even greater deterioration in Sino-Japanese relations. For the US, while the establishment of a standing army would not be opposed, there is more focus in Washington on Japan's pledges of greater defence spending, rather than whether Tokyo commands Self-Defence Forces or an army. 

• The latest downswing has seen USDJPY extend its pullback from the post-election highs to 2.34%, printing a low of 154.07 in recent trade. While broader dollar weakness exacerbated yesterday’s price action, today’s acute yen strength shows that both legs of the trade are gathering momentum.
• Furthermore, the lack of any meaningful bounce for USDJPY following the US data despite broader greenback stability may leave the pair vulnerable to a further acceleration as we approach tomorrow’s US employment report.
• With the pair now comfortably through the 100-day moving average, we refresh the downside technical levels should momentum continue to gather speed:
  • Support 1: 152.10 - Jan 27 low
  • Support 2: 150.98 - Trendline support drawn from the Apr 22 ‘25 low
  • Support 3: 149.67 - 50% of the Apr 22 ‘25 - Jan 14 bull cycle
  • Support 4: 147.47 - Pre October Election Close