JGB TECHS: (H5) Sharp Bounce Off Lows

In post-Tokyo trade on Friday, JGB futures closed with an uptick, +1 compared to settlement levels, after US tsys finished mildly stronger. 

• US stock futures have re-opened lower ahead of key earnings week, with the S&P 500 down ~0.50% and the Nasdaq down ~1%.
• “In a social media post on Sunday, Trump said he ordered an emergency 25% tariff on all Colombian goods coming into the US, which will be raised to 50% in a week. Oil, gold, coffee and flowers top the list of exports, according to Colombia’s  tax authorities.” (per BBG)
• On Friday, the S&P Global US composite PMI surprisingly fell in the January flash, showing its lowest since April, after 55.4 in December, which marked a 32-month high. Inflationary pressures saw a four-month high which helped limit the dovish reaction from the headline services miss.
• Meanwhile, U.Mich long-run inflation expectations were trimmed in the final January release from what had been a particularly sharp increase to the highest since 2008. 3.2% is still elevated though, having twice in the past three months exceeded what had been a typical 2.9-3.1% range since mid-2021.
• Focus this week is the FOMC policy announcement on Wednesday.
• Today, the local calendar will see Coincident/Leading Index alongside an Auction for Enhanced-Liquidity 5-15.5 YR.

TYH5 has re-opened at 108-18, +0-03 from NY closing levels. 

• US stock futures have re-opened lower ahead of key earnings week, with the S&P 500 down ~0.50% and the Nasdaq down ~1%.
• “In a social media post on Sunday, Trump said he ordered an emergency 25% tariff on all Colombian goods coming into the US, which will be raised to 50% in a week. Oil, gold, coffee and flowers top the list of exports, according to Colombia’s  tax authorities.” (per BBG)
• On Friday, US tsys finished mildly stronger.
• Surprisingly, the S&P Global US composite PMI fell in the January flash, showing its lowest since April, after 55.4 in December, which marked a 32-month high.
• However, firms' expectations of output over the coming year remain strong looking at policies under the second Trump administration. Inflationary pressures saw a four-month high which helped limit the dovish reaction from the headline services miss.
• Meanwhile, U.Mich long-run inflation expectations were trimmed in the final January release from what had been a particularly sharp increase to the highest since 2008. 3.2% is still elevated though, having twice in the past three months exceeded what had been a typical 2.9-3.1% range since mid-2021.
• Focus this week is the FOMC policy announcement on Wednesday.

• 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: 96.190/360 High Dec 31 / High Dec 11  
• PRICE: 96.110 @ 15:48 GMT Jan 24
• SUP 1: 95.830 - 1.000 proj of the Dec 11 - 20 - 31 price swing  
• SUP 2: 95.760 - Low 14 Nov ‘24
• SUP 3: 95.480 - Low Jan 11 2023 and a major support 

A bear cycle in Aussie 3-yr futures remains intact and short-term gains are considered corrective. The recent move down reinforces the bear theme and the contract has traded through the December low. A deeper sell-off would refocus attention on 95.760, the 14 Nov ‘24 low. On the upside, a clear reversal would instead signal scope for an extension towards 96.190, the Dec 31 high, and 96.360, the Dec 11 high.