GILTS: Wednesday Highs & Trade Headlines Limit Rally
Mar-28 15:20
Bulls are unable to push futures and 10-Year yields below respective Wednesday highs and lows, which limits the recovery driven by the U.S. PCE data and subsequent mark lower in the latest Atlanta Fed GDPNow forecast.
- Positive comments from U.S. President Trump following a call with Canadian counterpart Carney also play into the move away from session highs in more recent trade.
- This leaves the bearish technical theme intact.
- Initial support and resistance of note in futures located at 90.55/91.82, respectively. Contract last ~91.40.
- Yields 4-6.5bp lower, 10- to 30-Year zone outperforms.
- 2s10s back below 50bop after yesterday’s close above the psychological marker (in what was the first such instance seen since ’21), while 5s30s remains below 100bp.
- BoE-dated OIS prices around 50bp of cuts through year-end, given the prevailing theme since the U.S. data.
- SONIA futures flat to +10.0.
- Looking ahead, the BoE DMP survey and final PMI readings headline next week’s UK data calendar. Elsewhere, comments from BoE’s Greene and the DMO’s quarterly consultation with investors & GEMMS (followed by the Apr-June issuance announcement) will also be eyed.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
May-25 | 4.275 | -18.3 |
Jun-25 | 4.241 | -21.6 |
Aug-25 | 4.119 | -33.9 |
Sep-25 | 4.073 | -38.5 |
Nov-25 | 3.991 | -46.6 |
Dec-25 | 3.958 | -49.9 |
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JPY: USD/JPY Re-Correlates With Stocks, Resistance Seen Scant
Feb-26 15:11
- Best volumes of the US and European sessions go through on the latest move in USD/JPY, although participation was seen stronger during Tokyo trade. Nonetheless, the pair edges to a new daily high - a move that goes someway to pausing the bearish phase that kicked off on the break of Y151.00 to the downside.
- A close above 148.57 today would confirm an end to the run of lower lows in the pair - which will raise questions about the possibility of a sustainable bounce in prices in the near-term. The recovery off lows for the pair has mirrored the corrective bounce in equities - particularly in the US, suggesting and return lower for the e-mini S&P could hinder any further recovery.
- We note USD/JPY has often been in demand in the early hours of the Asia-Pac session in recent weeks - particularly when following a sharper phase of selling in US hours. With the price now ~125 pips above yesterday's lows, markets will be watching for any continuation of this trend, particularly as resistance is seen scant into 150.74, the high from Feb 21.
