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Fed Reverberations Are Petering Out, BoJ Bond-Purchase Ops In Focus


Post-Fed impetus remains in the driving seat as the region reacts to the 75bp rate hike delivered on Wednesday, dubbed by Chair Powell as "unusually large" as he played down potential for such large moves to become the new norm. That being said, there are signs of it wearing off as the Asia-Pac session progresses.

  • T-Notes correct their post-Fed rally, moving away from Wednesday's high, with e-minis extending their upswing in early Asia hours. TYU2 trades +0-15+ at 115-20+ at typing. Eurodollars run 1.0-5.0 ticks higher through the reds. Cash Tsy yields trade unch. to +4.6bp higher, curve runs flatter as Tokyo trade got underway. The 5-/30-Year sector is re-inverting, after briefly turning positive on Wednesday. U.S. data docket for today includes housing starts, building permits, Philadelphia Fed Biz. Outlook & weekly jobless claims.
  • JGB futures have extended their overnight surge, with JBU2 last seen at 147.19, 161 ticks above previous settlement but off session highs (147.35). Post-Fed impetus has allowed them to erase the sharpest slide since 2013. Cash JGB yields mostly sit a touch lower, with 10-Year yield still hovering slightly above the BoJ's -/+0.25% target & 7-Year yield sitting even higher. This draws attention to the Bank's beefed up bond-buying activity intended to keep yields in check, with policymakers due to conclude their meeting on Friday.
  • ACGBs joined the reprieve rally as cash trading resumed in Sydney. Yields remain depressed, but slightly off initial lows, last 10.3-18.0bp lower. Futures have eased off after their post-Fed rally, YM last +20.8 & XM +13.5. Bills trade 16-21 ticks higher through the reds. Focus turns to Australian consumer inflation expectations & jobs market report, due for release later today.

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