Group 1 - The global long-term bond market is experiencing a rebound as investors seek buying opportunities after a sell-off, with U.S. and Japanese 30-year bond yields dropping approximately 20 basis points since early September, and UK yields falling over 10 basis points [1] - The recent decline in long-term bond yields is partly driven by reduced supply, as some countries shift their issuance focus to cheaper short-term bonds, with Japan proposing to cut long-term bond issuance and the UK central bank reducing long-term bond sales in its quantitative tightening plan [1][2] - There is a growing optimism in the long-term bond market, highlighting the significant role of supply concerns in recent sell-offs, despite ongoing worries about rising fiscal deficits [2] Group 2 - Strong economic growth globally is alleviating concerns about fiscal deficits and prompting investors to reconsider long-term interest rate trends, with recommendations for Australian investors to adopt positions that benefit from a flattening yield curve [3] - The Bloomberg Global Aggregate Index indicates that bets on long-term bonds are starting to pay off, with 10-year and longer bonds returning 0.7% this month, outperforming shorter-term bonds [6] - Recent auctions show strong demand for long-term bonds, with Japan's 40-year bonds seeing enthusiastic buying and the strongest demand for 20-year bonds since 2020 [6]

Market Overview - The GBP/USD is showing a fluctuating pattern, while the USD/JPY is exhibiting a weak trend. The EUR/USD has potential for upward movement, and the AUD/USD is under significant downward pressure from a trendline. The dollar index is supported by the middle band in the short term [1] Key Economic Insights - Federal Reserve's Williams stated that the policy remains moderately tight and inflation is gradually decreasing. Each meeting is considered "real-time" [2] - Brazil's Finance Minister emphasized that the dollar will continue to be a reserve of value for many years unless the U.S. makes significant mistakes [2] - Japan's Chief Cabinet Secretary announced the cancellation of a planned visit to the U.S. by the trade negotiation representative, insisting on lower U.S. tariffs [2] - The Bank of Japan's committee member reiterated the stance on interest rate hikes, noting concerns over tariff impacts [2] - Japan's two-year government bond auction demand hit a new low since 2009 [2] - The Russian Finance Minister projected that Russia's economic growth will not be less than 1.5% by 2025 [3] - The Slovak central bank governor appealed to the Supreme Court regarding a bribery case [4] - The Bank of Korea maintained its benchmark interest rate at 2.5%, aligning with market expectations, and expressed caution regarding potential exchange rate volatility [5] - The Bank of Korea's governor defended foreign exchange interventions aimed at preventing the depreciation of the won, which subsequently strengthened [6] Technical Analysis - GBP/USD is in a delicate balance, likely to fluctuate between 1.3405 and 1.3585. A clear market driver could break this balance and set a new direction [7] - The USD/JPY has a 14-day RSI of 45.967, indicating a neutral to slightly weak state, suggesting a potential for continued fluctuation [7] - The EUR/USD's 14-day RSI has just entered 50, indicating a need to monitor for upward movement, with a bullish flag pattern suggesting a breakout target of 1.2120 if it closes above 1.1740 [7] - The dollar index has key resistance levels at 98.83 and 98.95, with support levels at 98.27 and 97.5877. A drop below 97.54-97.59 could redefine the market structure [8] Upcoming Economic Data - The European Central Bank will release the minutes from the July monetary policy meeting at 19:30 [10] - Canada’s Q2 current account data and U.S. initial jobless claims for the week ending August 23 will be released at 20:30 [10] - The U.S. will also revise its Q2 annualized GDP rate at 20:30 and report on the July pending home sales index at 22:00 [10] - The EIA natural gas inventory data will be available at 22:30, followed by a speech on monetary policy by Fed Governor Waller at 06:00 the next day [10]

Core Viewpoint - Barclays strategists indicate that ultra-long Japanese government bond yields may face mild upward pressure following the recent Senate elections in Japan [1] Summary by Relevant Sections - **Market Reaction** - The balance of power between the ruling and opposition parties post-election suggests that the reasonable valuation for the 30-year Japanese government bond yield premium should be around 150 basis points [1] - This indicates an upward pressure of approximately 5 basis points from the previous level of 145 basis points [1] - **Temporary Factors** - The report mentions that some temporary factors could contribute an additional 5 basis points of upward pressure on yields [1]

Group 1 - The Japanese Finance Minister, Kato Katsunobu, has indicated a significant rise in ultra-long-term Japanese government bond yields [1] - This increase in yields reflects broader trends in the financial markets and may impact government borrowing costs [1] - The rise in bond yields could influence investor sentiment and market dynamics in Japan [1]

Core Viewpoint - The Japanese government is considering repurchasing some of the ultra-long Japanese government bonds issued at low interest rates in response to a sharp rise in yields [1] Group 1: Government Actions - The move to repurchase bonds aligns with the government's existing plan to reduce the issuance of ultra-long bonds amid rising yields [1] - The Ministry of Finance is attempting to collaborate with the Bank of Japan, which is also reevaluating its reduction plans for the upcoming year [1] Group 2: Economic Context - The repurchase initiative is part of a broader strategy to manage Japan's substantial public debt, which remains a significant concern for the government [1]

Core Viewpoint - The Japanese government is considering repurchasing previously issued ultra-long-term Japanese government bonds, indicating a potential shift in monetary policy and market dynamics [1] Group 1: Government Actions - The potential repurchase of ultra-long-term bonds suggests a proactive approach by the government to manage debt and interest rates [1] - This move may reflect concerns over rising interest rates and their impact on the economy [1] Group 2: Market Implications - The repurchase could lead to increased liquidity in the bond market, affecting yields and investor sentiment [1] - It may also signal a change in the government's strategy towards long-term debt management, which could influence future bond issuance [1]

Core Viewpoint - The Japanese government is considering repurchasing previously issued ultra-long-term Japanese government bonds to manage its debt and interest rate environment [1] Group 1: Government Actions - The potential repurchase of ultra-long-term bonds indicates a strategic move by the government to stabilize the bond market and control long-term interest rates [1] - This action may reflect concerns over rising interest rates and their impact on government financing [1] Group 2: Market Implications - The repurchase could lead to increased demand for government bonds, potentially lowering yields and affecting investor sentiment [1] - It may also signal to the market that the government is proactive in managing its debt obligations [1]

Group 1 - Japanese government bonds experienced significant movements, with the 40-year bond yield dropping over 3% to 3.424%, and the 30-year bond yield decreasing by 20 basis points to 2.835%, marking the lowest level since May 8 [1] - The U.S. long-term bond yields also saw a sharp decline, with the 30-year yield falling by 1.25% and the 20-year yield dropping by 1.17% [1] - The Nikkei index rose by 0.5% to 37,724.11 points, while the Tokyo Stock Exchange index increased by 0.6% [1] Group 2 - Concerns have been raised regarding the potential crisis in Japanese government bonds due to rising yields and supply-demand imbalances, particularly in the context of fiscal expansion and lackluster bond auctions [2] - The reversal of yen carry trades is expected to have a relatively controllable spillover effect on global liquidity [2] - Current valuations of ultra-long Japanese government bonds are considered undervalued, with potential for value appreciation following recent corrections [2]

Core Viewpoint - Nomura Securities suggests that if the Japanese government decides to reduce issuance, the ultra-long Japanese government bond market may continue to stabilize in the future [1] Group 1 - Nomura Securities strategist Jin Moteki believes that the Ministry of Finance may shift towards short-term borrowing starting in the third quarter, reducing the issuance of ultra-long bonds while increasing the issuance of short-term bonds [1] - This expectation appears to have led to a bull flattening of the Japanese government bond yield curve today [1] - Close attention is required on the results of the Japanese government bond primary dealer meeting scheduled for June 20 [1]