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Still In A Bear Cycle


Summary: USDBRL Extends Losses To Near 2%


Needle Still Points North


Focus on Midweek BoC, ECB Policy Announcements


EUR Crosses Come Under Pressure As ECB Beckons

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Positive risk appetite carried over into the Asia-Pac session denting core FI, as solid earnings reports from Wall Street inspired optimism. Talk of China easing rules on home loans for the rest of the year provided further support to risk sentiment, leading to another round of weakness in core bond markets. Meanwhile, the PBOC fully rolled over CNY500bn of maturing MLF loans to keep liquidity ample.

  • T-Notes edged lower and last change hands -0-02 at 141-14, off their session low of 131-12+. Cash U.S. Tsy curve bull steepened a tad, partly unwinding Thursday's move. Eurodollar futures last sit unch. to -2.0 ticks through the reds. The U.S. economic docket for today features retail sales, Empir M'fing, Uni. of Mich. Sentiment and Fedspeak from Williams & Bullard.
  • Weakness was evident in in JGB futures, as the Nikkei 225 ground in the opposite direction. The contract printed a session low of 151.39 and last operates at 151.42, 5 ticks above previous settlement. Cash JGB yields are marginally mixed. The space shrugged off the government's monthly assessment of the economy, in which the Cabinet Office suggested that economic recovery has slowed.
  • Cash ACGB curve runs generally steeper, with yields unch. to +3.7bp, albeit 5s drew some support from a firm ACGB Apr '26 sale. The auction attracted strong demand, with bid/cover ratio printing at 7.52x (prev. 6.15x). Aussie bond futures slid in tandem with their major overseas peers, YM last -2.0 & XM -1.5. Bills run 1-5 ticks lower through the reds. The AOFM unveiled a light issuance slate for next week, they are set to offer A$1.5bn of ACGB Apr '33 next Wednesday.