CHINA: Country Wrap: Premier Optimistic about Prospects.
Apr-09 06:11
- In a sea of red across the region, the onshore equities bourses in China were the sole risers today as state owned asset managers bought the market with inflows into ETF's linked to the 'national team' topped CNY87bn on Tuesday, an all time record. (source MNI – Market News).
- Chinese Premier Li Qiang expressed optimism about China's economic growth in 2025, despite the latest tariff threat from US President Donald Trump. Li said China has ample policy tools to "fully offset" any negative external shocks and is strongly confident about maintaining the country's healthy and sustainable economic growth this year. (source: BBG)
- The Hang Seng was down in line with other regional indexes, falling -1.55%, whilst the CSI 300 rose +0.30%, Shanghai +0.24% and Shenzhen +0.47% respectively.
- CNY: Yuan Reference Rate at 7.2066 Per USD; Estimate 7.3387
- Bonds were stronger today with the CGB 10YR at 1.64%, - 2bps on the day.
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BUND TECHS: (M5) Oversold But Remains Bearish
Mar-10 06:04
- 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.
US TSYS: Cash Bonds Richer Across Benchmarks But Off Session Bests
Mar-10 05:39
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.
JGBS: Sharply Weaker After Poor 5Y Auction, Q4 GDP Tomorrow
Mar-10 05:20
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.
