GOLD TECHS: Corrective Cycle

• RES 4: 130.40 Low Feb 19               
• RES 3: 129.96 High Mar 5     
• RES 2: 129.41 Low Jan 14 
• RES 1: 128.29 High MAr 7                  
• PRICE: 127.35 @ 05:48 GMT Mar 10
• SUP 1: 126.64 Low Mar 6     
• SUP 2: 126.56 2.500 proj of the Feb 5 - 19 - 28 price swing            
• SUP 3: 126.28 2.618 proj of the Feb 5 - 19 - 28 price swing 
• SUP 4: 126.00 Round number support 

Bund futures are trading closer to their recent lows and a bearish theme remains intact. Last week’s move lower signals scope for an extension towards 126.56 next, a Fibonacci projection. Further out, 126.00 is now within range. Note that the contract is in oversold territory, a recovery would allow this condition to unwind. Initial firm resistance to watch is seen at 129.41, the Jan 14 low. 

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.