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GLOBAL: Large TY and JPY moves following US presidential debate / BOJ comments

GLOBAL
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  • Some big moves through the Asian session as Europeans start to get to their desks. Treasury futures have continued their move higher following the US Presidential debate which polls show Harris won. The technical bull trigger 115-19 high of August 5 breached (now trading at 115-21, just below the intraday high of 115-23) and with round number resistance at 116-00. This represents a greater than 10bp fall in US 10-year yields since around 13:30BST yesterday.
  • The moves in Treasuries have supported the yen, along with comments from hawkish BOJ's Nakagawa around four hours ago (supplemented by reinforcement from her over the past half hour). USDJPY has also broken through a notable technical level - the low of 5 August at 141.70 that has been challenged since Friday. With that breached the intraday low (140.71) has breached those of early January although at writing we are back up at 141.22. Our technical analyst notes that the key support is at 140.25 (the low of 28 December 2023).
  • These moves all come ahead of US CPI later today - the potential tiebreaker for the Fed to decide on a 25bp or 50bp cut next week. Consensus sees core CPI at 0.2% M/M in August after a slightly softer than expected 0.165% M/M in July. MNI’s survey of analysts, including multiple unrounded estimates, suggests it is firmly centered at 0.20%. Headline CPI is primed for a ‘low’ 0.2% M/M reading but note an almost even split between 2.5/2.6% Y/Y reading which could easily drive what appears a beat for the 2.5 Bloomberg consensus. For our full US CPI Preview click here.
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  • Some big moves through the Asian session as Europeans start to get to their desks. Treasury futures have continued their move higher following the US Presidential debate which polls show Harris won. The technical bull trigger 115-19 high of August 5 breached (now trading at 115-21, just below the intraday high of 115-23) and with round number resistance at 116-00. This represents a greater than 10bp fall in US 10-year yields since around 13:30BST yesterday.
  • The moves in Treasuries have supported the yen, along with comments from hawkish BOJ's Nakagawa around four hours ago (supplemented by reinforcement from her over the past half hour). USDJPY has also broken through a notable technical level - the low of 5 August at 141.70 that has been challenged since Friday. With that breached the intraday low (140.71) has breached those of early January although at writing we are back up at 141.22. Our technical analyst notes that the key support is at 140.25 (the low of 28 December 2023).
  • These moves all come ahead of US CPI later today - the potential tiebreaker for the Fed to decide on a 25bp or 50bp cut next week. Consensus sees core CPI at 0.2% M/M in August after a slightly softer than expected 0.165% M/M in July. MNI’s survey of analysts, including multiple unrounded estimates, suggests it is firmly centered at 0.20%. Headline CPI is primed for a ‘low’ 0.2% M/M reading but note an almost even split between 2.5/2.6% Y/Y reading which could easily drive what appears a beat for the 2.5 Bloomberg consensus. For our full US CPI Preview click here.