Cheaper & Steeper On JGB Lead Before German Data Helps Space Find A Base

JGB impulses, via perceptions of BoJ communique/policy normalisation risks and a poorly received round of 30-Year JGB supply, were in the driving seat in Asia-Pac hours.

• Softer-than-expected industrial production data out of Germany then helped limit the move during the handover to European trade, with a move away from worst levels seen since.
• Cash Tsy yields are now 1-4bp higher on the day, as the curve steepens. This comes after a few sessions of flattening in early December.
• TYH4 sits -0-06+ at 110-30, 0-07 off the base of its 0-18+ session range, with volume running at a more-than-healthy ~327K.
• Technicals in the contract remain bullish, although here isn’t much in the way of meaningful technical support seen until the 20-day EMA.
• Fed funds futures show ~17.5bp of cuts through the March ’24 FOMC and ~124bp of cuts through ’24 on the whole, holding away from recent dovish extremes.
• Weekly jobless claims data headlines the NY docket.
• The Fed remains in its pre-meeting blackout period, leaving broader, immediate focus on tomorrow’s NFP release.