US TSYS: Rise in Core/Supercore CPI, But Wait Until Thursday's PPI: Powell

• Treasuries held to a narrow session range Monday amid decent volumes (TYH5 over 1.5M contracts despite Japan out on extended holiday) ahead of this week's PPI and CPI inflation data on Tuesday and Wednesday respectively.
• Late session risk-on saw Tsys soften (TYH5 107-08, -4.5) while stocks climbed off lower lvls, SPX Eminis near steady, DJIA outperforming, Nasdaq weaker but well off lows, apparently reacting to chatter that an Israeli ceasefire-hostage deal may be reached by tomorrow.
• NY Fed consumer inflation expectations saw a mixed month for December, with the 1Y holding steady at 3.0%, the 3Y jumping 40bps to 3.0% and the 5Y falling 20bps to 2.7%. The 3Y measure is its highest since Nov 2023 and came amidst its highest uncertainty since May.
• Wednesday’s US CPI report headlines the weekly calendar, with Bloomberg consensus currently looking for a 0.2% M/M print for core CPI in what’s a close call with a 0.3% M/M. Indeed, our initial review of 13 unrounded analyst estimates sees these generally more detailed projections centered around 0.25% M/M for core CPI in December.

• RES 4: 160.00 Round number resistance   
• RES 3: 159.45 High Jul 12
• RES 2: 159.26 0.618 proj of the Sep 16 - Nov 15 - Dec 3 price swing  
• RES 1: 158.87 High Jan 10  
• PRICE: 157.73 @ 20:27 GMT Jan 13
• SUP 1: 156.71 20-day EMA
• SUP 2: 154.60 50-day EMA  
• SUP 3: 154.44 Low Dec 19
• SUP 4: 153.16 Low Dec 17  

USDJPY bulls remain in the driver’s seat and the pair is holding on to the bulk of its recent gains. Last week’s fresh cycle high, reinforces the bullish condition. The recent breach of 156.75, the Nov 15 high, confirmed a resumption of the uptrend and opens 159.45, the Jul 12 high. Moving average studies are in a bull-mode position highlighting a dominant uptrend. Initial firm support is 156.71, the 20-day EMA.

• 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: 95.920 @ 20:13 GMT Jan 13
• 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. The latest move lower 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 reversal higher would instead signal scope for an extension towards 96.360, the Dec 11 high. Further out, the key resistance is at 96.730, the Sep 17 high.