ASIA STOCKS: Asian Equities Edges Lower Following FOMC Minutes
Asian equities broadly declined on Thursday as risk sentiment weakened following the Fed's latest me...
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JGBS: Cash Bonds Richer But Trump Tariff Talk Has Seen Gains Pared
In Tokyo morning trade, JGB futures opened stronger, hitting +19 compared to settlement levels, in line with stronger US tsy futures (TYH5), which hit 109-02, +0-17 compared to closing levels. However, the move has been pared to +10 for JYH5 on Trump tariff news.
- News just out that Trump suggests tariffs on Canada and Mexico could take effect on February 1 has caused a sharp reversal.
- Cash US tsys were sharply richer early in today’s Asia-Pac session, with yields 6-9bps lower after yesterday’s holiday. However, that has been pared on the Trump news to 4-6bps richer.
- Today’s local calendar is empty apart from 40-year supply.
- Cash JGBs are 1-2bps richer across benchmarks. The benchmark 10-year yield is 1.5bps lower at 1.185% versus the cycle high of 1.262%.
- Swap rates are slightly lower. Swap spreads are wider.
US TSYS: Tsys Future Give Back Some Morning Gains, Following Tariff Headlines
- Tsys futures have reversed earlier gains, as we now trade back at opening levels following comments from Trump about 25% tariffs on Canada & Mexico. TY last trades +07 at 108-25 after earlier hitting a high of 109-02.
- Volumes in futures have surged with TY seeing over 300% the 5-day average volumes
- Cash tsys are trading 4bps to 6bps lower across the curve, with the belly outperforming, the 7yr is leading the way. 2yr was last -4bps at 4.242%, while the 10yr is -5.7bps at 4.57%. The 2s10s is -1.5bps at 32.368.
President Trump may enact 25% tariffs on Mexico and Canada at the beginning of February, he says during remarks in the Oval Office, per bbg.
FOREX: USD Rebounds On Trump Tariff Remarks, CAD and MXN lose 1%
The USD has swung sharply higher, following comments from US President Trump, that tariffs would be enacted on Canada and Mexico (most likely on Feb 1 per comments on Trump). the BBDXY index is up +0.50%, last near 1309.
- USD/CAD has surged over 1%, last near 1.4475. USD/MXN is up 1.10% as well, the pair last around 20.75. Both currencies are slightly away from worst levels. AUD/USD has lost 0.9%, back to the low 0.6220 region.
- USD/CNH is up to close to 7.2900, around 0.40% firmer.
- Broader risk appetite is softer, with US equity futures off sharply and back in the red.
