US TSYS: 10YY Breaking Key Support
Apr-03 02:50
Cash yields gapped lower below the key 4.10% area on the open in reaction to US President Trump's announcement on reciprocal tariffs.
- Asia continues to digest the impact of said Tariffs. Risk remains on the back foot, though yields have managed to lift off their early lows of around 4.04%. Importantly it remains below the key 4.10% support area which broke this morning and should this continue to cap it potentially opens up a move lower back to the 3.60/80% support area.
- Bessent seems to be getting his way on lower yields but are they prepared to sacrifice equities to do it?
- Uncertainty still abounds with sector specific tariffs still to be applied which will have major implications for Pharma, Semiconductors, Copper and Lumber. Which all points to risk remaining under pressure and demand for the safe haven of treasuries to continue.
- As a result, expect buyers to be around on any bounce in yields back towards the 4.12/15% look for a move sub 4.00%.
- 2-10’s trading around 26bps and 5-30’s 63bps.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JGBS: Richer At Lunch Ahead Of 10Y Supply
Mar-04 02:41
At the Tokyo lunch break, JGB futures are stronger, +8 compared to settlement levels, after reversing overnight weakness.
- Outside of the previously outlined domestic data drop, there hasn't been much by way of domestic drivers to flag.
- “President Trump's latest criticism about a weak yen may be a good opportunity for Japan to think more seriously about how to fix the excessive depreciation of the yen, which has caused import-price inflation, says SMBC Nikko Securities strategist Makoto Noji.” (per BBG)
- Cash US tsys are 1-3bps richer, with a steepening bias, in today’s Asia-Pac session after yesterday’s solid gains.
- Cash JGBs are flat to 3bps richer across benchmarks, with a flattening bias. The benchmark 10-year yield is 1.2bps lower at 1.402% ahead of today’s supply.
- This month, the 10-year auction offers an outright yield 10-15bps higher than last month but 7bps lower than its cyclical high of 1.466%. Additionally, the yield curve between 2- and 10-year bonds has steepened slightly compared to the prior month.
- Today’s auction is also likely to be supported by an improvement in sentiment toward global long-end bonds over the past two months. For instance, the US 10-year yield is roughly 65bps lower than its early January high.
- Swap rates are 1-3bps lower, with a flatter curve. Swap spreads are mostly tighter.
JGBS AUCTION: 10-Year JGB Supply Faces Higher Yield & Steeper Curve
Mar-04 02:36
The Japanese Ministry of Finance (MoF) will today sell Y2.6tn of 10-Year JGBs. This month, the 10-year auction offers an outright yield 10-15bps higher than last month but 7bps lower than its cyclical high of 1.466%.
- Additionally, the yield curve between 2- and 10-year bonds has steepened slightly compared to the prior month.
- Today’s auction is also likely to be supported by an improvement in sentiment toward global long-end bonds over the past two months. For instance, the US 10-year yield is roughly 65bps lower than its early January high.
- The relative affordability of 10-year JGBs versus futures— gauged by the 7- to 10-year spread — sits little changed relative to last month, after bouncing off the lower end of its range over the past year during the month.
- Amid this backdrop, it will be interesting to see if the current 10-year yield generates sufficient demand at today’s auction.
- Results are due at 0435 GMT / 1235 JT.
CHINA: Bond Futures Down as Markets Wait for NPC.
Mar-04 02:27
- Traditionally markets are quiet leading up to the National Party Congress and this year (despite the tariff threat impacting equity markets) bonds remain contained.
- The 10YR China bond future is trading flat today at 108.46, trending just below the 50-day EMA of 108.50 where it has been for several trading days.
- The 2YR China bond future is down by -0.03 at 102.64, trending back down towards the 200-day EMA of 102.63.
- Government bond yields are lower today with the CGB 10YR at 1.75% (-1bps).
- The CGB 10YR has traded in a tight range over the last week as bond markets await the outcome of the NPC with expectations growing for monetary policy and fiscal policy intervention to support economic growth.
