JGBS: Futures Weaker O/N, Risk-On Pressures Short US Tsys

• 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: 95.740/851 - High Mar 4 / High Dec 11 
• PRICE: 95.575 @ 16:11 GMT Mar 21
• SUP 1: 95.420/95.300 - Low Feb 13 / Low Jan 14  
• SUP 2: 95.275 - Low Nov 14  (cont) and a key support
• SUP 3: 94.640 - 1.0% 10-dma envelope

Aussie 10-yr futures have faded sharply off the mid-week high, opening a small gap with first resistance. 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. A stronger bearish theme would expose 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.

ACGBs (YM -1.0 & XM -1.0) are slightly weaker after an uneventful end to the trading week for US tsys.  US tsys continued to range trade, with the 10-year rate locked between 4.20-4.25% on Friday and closing at the upper end of the range.

• Cash ACGBs are flat to 1bp cheaper with the AU-US 10-year yield differential at +16bps.
• Swap rates are little changed.
• The bills strip little changed.
• RBA-dated OIS pricing is unchanged across meetings today. A 25bp rate cut in April is given a 5% probability, with a cumulative 66bps of easing priced by year-end (based on an effective cash rate of 4.09%).
• It is a quiet week in Australia with the focus on Tuesday’s budget, especially given an election is likely to be called soon afterwards.  It is expected to show deficits across the forecast horizon with additional expenditure likely in an attempt to win votes.
• The key data item for the week is Wednesday’s February CPI data.
• This week, the AOFM plans to sell A$300mn of the 4.75% 21 June 2054 bond today, A$800mn of the 3.50% 21 December 2034 bond on Wednesday and A$700mn of the 1.25% 21 May 2032 bond on Friday.

• RES 3: 97.190 - High May 5 2023
• RES 2: 96.730/932 - High Sep 17 / 76.4% of Mar-Nov ‘23 bear leg
• RES 1: 96.360 - High Dec 11 
• PRICE: 96.280 @ 16:10 GMT Mar 21
• SUP 1: 95.900 - Low Jan 14 
• SUP 2: 95.760 - Low 14 Nov ‘24
• SUP 3: 95.480 - Low Jan 11 2023 and a major support 

Aussie 3-yr futures have pulled back from their most recent highs - a correction. A resumption of gains would signal scope for 96.360, the Dec 11 high. Clearance of this level would open 96.730, the Sep 17 ‘24 high. On the downside, a stronger reversal lower from current levels would signal a resumption of the downtrend. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low.