Futures Surge On Historic Global FI Rally

JGB futures continued to surge overnight, with the impulse derived from a historic richening in core global FI markets and exiting of shorts extending the move. The contract finished comfortably off of best levels but was still over 190 ticks firmer on the day, after hitting the highest levels seen since late November in the process. Expect this to reverberate in early Tokyo trade. This comes after 10-Year JGB yields pulled further away from the BoJ’s YCC cap on Monday. The BoJ has some more breathing room, at least for now, thanks to the SVB failure.

• Local headline flow has been light, although the latest North Korean missile tests (seemingly two short-range ballistic missiles) will generate some interest.
• 5-Year JGB supply is due today, providing the headline event of the local docket. That will leave feedthrough from Tuesday’s situation at the forefront for most of the session.
• Technically, if bulls force a breach of the overnight high in JGB futures (148.99) focus will turn to the November 11 high (149.75), with the SVB situation amplifying the pressure on short positioning and threatening a meaningful break of the technical downtrend.