JGBS: Futures Lower Overnight, Tokyo CPI Prints Lower Across Measures

In post-Tokyo trade, JGB futures closed slightly weaker, -3 compared to settlement levels, after US tsys finished the NY session little changed ahead of today’s FOMC decision. 

• US tsys pared early losses after lower-than-expected Durable Goods Orders and down-revision to prior, while Capital Goods were higher than expected.
• The Conference Board consumer survey saw confidence disappoint in January at 104.1 (cons 105.9) after an upward revised 109.5 (initial 104.7) for its lowest since September. Declines were seen in both main categories, also to their lowest since September, but were most pronounced for the present situation.
• Stocks rebounded, semiconductors outperforming software & hardware makers as markets had more time to contemplate the new competition for US AI developers.
• Moves are underway that would allow Japan’s Government Pension Investment Fund to participate directly in government bond auctions, according to people familiar with the matter. The Ministry of Finance will soon invite public comments and amend a government ordinance that defines participants in JGB auctions. (per BBG)
• Today, the local calendar will see BOJ Minutes of the Dec. Meeting and the Consumer Confidence Index alongside 5-year GX supply.

• Gold bounced back from Monday’s decline to post a strong day on Tuesday.
• Gold had suffered at the hands of a strong USD but ultimately overnight it’s ‘safe-haven’ status prevailed, rallying to regain most of Monday’s losses.
• Opening at US$2,740.81and doing very little in the morning session, it’s fortunes changed rallying for most of the afternoon to finish at $2,763.31.
• President Trump said Monday evening that he ‘wants to impost across the board tariffs that are much bigger than 2.5%” and that he has in his mind what the number will be to protect the country.
• Gold now turns its attention away from tariffs for a moment as the Federal Reserve meets this week to decide the next move for interest rates.
• The current market consensus is for the Fed to stay on hold at this week’s meeting.
• As gold is not interest baring, a cut in rates is considered good for gold as the cut reduces the cost of financing. 

• RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
• RES 1: 95.615/851 - High Dec 31 / High Dec 11 
• PRICE: 95.530 @ 16:11 GMT Jan 28
• SUP 1: 95.275 - Low Nov 14  (cont) and a key support 
• SUP 2: 94.477 - 1.000 proj of the Dec 11 - 23 - 31 price swing
• SUP 3: 94.495 - 1.0% 10-dma envelope

The Aussie 10-yr futures contract continues to trade below the Dec 11 high of 95.851, and has traded through the Dec low. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish theme. For bulls, a confirmed reversal and a breach of 95.851, the Dec 11 high, would instead reinstate a bull cycle and refocus attention on resistance at 96.207, a Fibonacci retracement point.