USDJPY TECHS: Bearish Trend Structure

TYM5 is 110-25+, +0-7+ from closing levels, but off the Asia-Pac session high of 111-00.

• Focus on technical support at 110-12.5/110-00 (Intraday low / High Feb 7); resistance above at 111-15 (Wed's high) followed by 112-01/02 (High Mar 4 / 1.382 proj of Jan 13-Feb 7-12 swing).
• Cash US tsys are 2-3bps richer across benchmarks in today’s Asia-Pac session as Asian traders digested Friday’s US jobs data and remarks from Federal Reserve Chair Jerome Powell.
• US payrolls rose by 151k in February, trivially below the 160k consensus estimate. Net revisions to previous months were negligible. The unemployment rate increased to 4.1%, from 4.0% in January.
• Fed Chair Powell said the central bank doesn’t need to hurry to ease policy further and the path to 2% inflation is expected to be bumpy. Fed governor Waller said he wouldn’t support a March cut but sees room to cut rates by two to three times this year. 

JGB futures are sharply weaker, -41 compared to settlement levels, after today’s 5-year auction result. The market opened stronger after weaker-than-expected Labor Earnings but that as quickly reversed. 

• Today’s 5-year bond auction demonstrated weak demand metrics, with the auction price failing to meet expectations. Moreover, the cover ratio declined and the auction tail lengthened.
• These results aligned with the poor demand metrics observed at this month’s 10-year auction and came despite offering a yield 15-20bps higher than last month, marking a cyclical peak.
• “The US brokerage (JP Morgan) predicts BoJ rate hikes in June and December, but possible US moves may complicate the picture: if tariffs weigh on global economic growth, that might hinder the BOJ’s push to raise rates, but the central bank may have to rush a rate increase if Japan is accused of weakening the yen.” (per BBG)
• Cash US tsys are 2-3bps richer across benchmarks in today’s Asia-Pac session.
• Cash JGBs are 2-8bps cheaper across benchmarks. The benchmark 10-year yield is 5.5bps higher at 1.575%, just below the cycle high of 1.580% set today.
• Swap rates are 2-4bps higher. 
• Tomorrow, the local calendar will see Q4 (F) GDP, Household Spending and Money Stock data, alongside BoJ Rinban Operations covering 1-3-year, 5-10-year and 25-year+ JGBs.

Over the weekend, data out showed that the Chinese economy is mired in deflation with both the PPI and CPI now in negative territory. PPI has been stuck firmly negative for multiple years now, showing the challenges companies face after 29 consecutive months of decline.  For CPI it was the first time it had fallen back into deflation in over a year.

• China’s main indexes were all lower with the Hang Seng down the worst performer down -2.1%, CSI 300 down -0.83%, Shanghai down -0.59% and Shenzhen down -0.44%.
• Korea’s KOSPI ignored the down day in China to post a +0.43% gain as it approaches key technical levels.
• Malaysia’s FTSE Malay KLCI took the lead from China, falling -0.19% continuing last week’s trend that saw a decline of -1.74%.
• Indonesia’s Jakarta Composite too was dragged lower by -0.54%, despite putting in one of the weeks in recent memory rising +5.8%.
• Other key markets were mixed with Singapore’s FTSE Straits Times down -0.16%, Thailand’s SE Thai down -1.00% whilst The Philippine Stock Exchange Index is up 1.00%.
• India’s NIFTY 50 is opening in a positive mood, up +0.33%, following on from last week’s gain of +1.93%.