OUTLOOK: Price Signal Summary - Bull Cycle In Bunds Remains In Play

The NASDAQ 100 contract is the first e-mini to unwind overnight losses, with the uptick from lows accelerating a little since NY participants started to filter in.

• The move also helps core global FI markets away from session highs.
• Headline flow remains muted, with global fiscal, macro and geopolitical cues eyed ahead of a raft of central bank decisions due through the week.

• As sentiment has turned more risk averse in recent weeks, AUDJPY has remained an important cross for FX market participants. Analysts have highlighted that being short typically sees the greatest returns in a backdrop of lower equities and lower yields, and event risk this week should keep the focus on AUDJPY. Pricing for a straddle expiring on Friday incorporates a move of +/- 110 pips from current spot levels.
• The 50-day EMA has acted as strong resistance, and the cross has spent March consolidating below the 95.00 handle, keeping a bearish threat present. Two lows at 91.86 provide initial support, of which a breach would target a move to the carry unwind lows around 90.00 from August last year.
• Indeed, Goldman Sachs prefer leaning into short AUD/JPY as equities look to have a somewhat high bar for meaningful reversal. They recommend going short with a target of 90.5 and a stop of 97.
• While no change is expected at this week’s BoJ meeting, the timing of recent messaging suggests the decision will come with a hawkish outlook. This may see the markets ramp up hike expectations for the decision due on May 1. It is also noteworthy that the BoJ raised interest rates last year shortly after Rengo published its initial count of wage rises.
• Following both the BOJ and Fed decisions on Wednesday, Australia will release employment data for February on Thursday, particularly important given the RBA said that the strong labour market would have been the key reason to leave policy on hold in February.

Option desks report better Treasury option volume overnight, focus on April calls ahead of Wednesday's FOMC and Friday's expiration. Some interest in May'25 30Y call spreads earlier. Underlying futures still mostly higher after scaling back early overnight support, near low end of range while projected rate cuts through mid-2025 have receded vs. late Friday levels (*) as follows: Mar'25 steady at -.2bp, May'25 at -7.3bp (-8bp), Jun'25 at -22.5bp (-24bp), Jul'25 at -31.7bp (-33.2bp).

• Treasury Options: (April options expire Friday)
  • 25,000 FVJ5 108.5 call, 3 ref 107-27
  • 30,000 TYJ5 110.75 calls, 21 ref 110-28.5
  • over 8,000 TYJ5 112.5 calls, 1 last
  • over 5,000 USK5 122/126 call spds, ref 117-04
  • 1,750 TYK5 114.5 calls ref 110-23.5
• SOFR Options:
  • 1,000 0QM5 96.43 straddles ref 96.46
  • over 7,000 SFRK5 95.68/95.75 put spds
  • 3,500 0QM5 96.56/96.75 call spds ref 96.415
  • 8,500 0QM5 96.31/96.56/96.75 broken call flys ref 96.415