JPY: Downtrend Just Beginning?

In local morning trade, NZGBs are sharply cheaper after US tsys finished with a bear-steepener, yields 4-9bps higher.

• This came after US tsys reversed off Tuesday morning's yield lows as stocks rebounded off lows. Nasdaq firmly in the green before making a late retreat ahead of the close. Another factor was a retreat in Bunds amid reports officials were proposing an E500B "whatever it takes" defence fund.
• No substantive US data Tuesday, "I do factor in some effect of tariffs on inflation on prices. I do think we're going to see that later this year," Williams told a Q&A at a Bloomberg Invest event.
• Focus now turns to President Trump addressing the joint session of Congress tonight at 2100ET. Followed by ADP private employment data tomorrow morning at 0815ET.
• Late session chatter that President Trump wants to announce a minerals deal with Ukraine after all.
• Swap rates are 7-9bps higher, with the 2s10s curve steeper.
• Today, the local calendar will see ANZ Commodity Price data.
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 0.25% May-28 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 1.75% May-41 bond.

Yen lagged broader USD shifts through Tuesday. USD/JPY tracks near 149.75/80 in early Wednesday dealings, losing a little bit of ground versus the USD for Tuesday's session. All the other majors have rallied against the USD, led by the EUR (up over 1.25%). Broader stagflationary concerns for the US economy weighed on dollar sentiment. 

• USD/JPY broke below 148.60 support during Tuesday trade, a level that had been building in significance. Spot traded as low as 148.10 but bounced back ahead of the APAC crossover, tracking back towards 150.00 in latest dealings.
• Sentiment has been impacted by late US Tuesday comments from US Commerce Secretary Lutnick, who hinted tariff relief/compromise with Canada and Mexico could be announced Wednesday in the US during a Fox News interview. This has aided CAD and MXN sentiment and broader risk appetite. US yields also spiked late in US trade, the 10yr yield back to 4.25%, after touching 4.10% earlier in Tuesday trade.
• This moves have seen the traditional yen safe underperform through the latter stages of Tuesday US trade and early Wednesday Asia Pac trade. On the upside for USD/JPY, key short-term resistance has been defined at 151.30, the Mar 3 high. Clearance of this level is required to signal a base.
• Locally today we have the final Feb reads for the Jibun bank PMIs (services and composite). We also have a speech from Deputy Governor Uchida.
• In the option expiry space note the following for NY cut later: Y147.90-00($702mln), Y148.50($505mln), Y149.00($720mln), Y151.00-10($1.0bln), Y151.85-00($1.0bln). 

• NZD/USD jumped +0.77% to 0.5660 on Tuesday, tariff considerations have been a primary driver of FX sentiment, with the USD weaker across most G10 currencies, the BBDXY is -0.60%, with the ongoing stagflationary concerns regarding the US economy also weighing on the USD.
• We tested key support on Monday at 0.5600, briefly trading below it below ticking higher a clear break here would then open up a move to retest the Feb 3 lows of 0.5516. To the upside, key resistance sits around 0.5674/.5695 (20-, 50-Day EMA).
• GDT prices declined, with the average price for whole milk powder falling to $4,061 from $4,153. The weighted average price for all milk products dropped to $4,209 per ton. The GDT price index fell 0.5%, reflecting a broad decline across dairy products.
• Expiries 0.6350 (NZD352.8m). Upcoming notable strikes: 0.5795 (NZD1.14b March 7), 0.6150 (NZD330m March 6), 0.5840 (NZD328.6m March 10)
• RBNZ dated-OIS is fully pricing in a 25bps cut in April, while there is about a 82% chance of a further 25bps cut priced for May up from about 70% last week, with a cumulative 80bps of cut priced by November, up from 64bps.
• The NZ-US 2yr swaps continues to rise, trading 3bps higher on Tuesday to -47.5bps, that is a 37.5bps move since the start of Feb
• Today we have ANZ Commodity Price & Corelogic home Values prices