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JGBS: Firmer With US Tsys, 10yr JGB Yield Close To 200-day MA

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JGB futures (JBZ4) have pushed higher since the open. We were last 144.67, +.13 versus settlement levels. Positive spill over is evident from the move higher in US TSY futures, as speculation continues on the size of the first Fed cut next week. 

  • For JGB futures this week's highs rest at 144.86. Beyond that earlier highs rest near 145.00. We also have 145.95/146.67 - High Aug 6 / High Mar 6. The technical backdrop for futures remains bullish.
  • In the cash JGB space, the weakest part of the curve is in the 10-20yr tenors, both off around 2-2.5bps. The 10yr JGB yield is back to 0.85%. This leaves us nearing the simple 200-day MA in yield terms, see the chart below. Dips below this support point haven't been sustained in recent years, see the chart below.  
  • In the swap space, we are lower by around 2bps for 7-30yr tenors. The 10yr is back to 0.8725%.
  • With only a 3 month bill sale on tap today, coupled with final July IP, JGB sentiment is likely to be dictated by US TSY moves. 

Fig 1: 10yr JGB Yield Close To 200-day MA Support

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JGB futures (JBZ4) have pushed higher since the open. We were last 144.67, +.13 versus settlement levels. Positive spill over is evident from the move higher in US TSY futures, as speculation continues on the size of the first Fed cut next week. 

  • For JGB futures this week's highs rest at 144.86. Beyond that earlier highs rest near 145.00. We also have 145.95/146.67 - High Aug 6 / High Mar 6. The technical backdrop for futures remains bullish.
  • In the cash JGB space, the weakest part of the curve is in the 10-20yr tenors, both off around 2-2.5bps. The 10yr JGB yield is back to 0.85%. This leaves us nearing the simple 200-day MA in yield terms, see the chart below. Dips below this support point haven't been sustained in recent years, see the chart below.  
  • In the swap space, we are lower by around 2bps for 7-30yr tenors. The 10yr is back to 0.8725%.
  • With only a 3 month bill sale on tap today, coupled with final July IP, JGB sentiment is likely to be dictated by US TSY moves. 

Fig 1: 10yr JGB Yield Close To 200-day MA Support

Keep reading...Show less