Futures Are Slightly Weaker Overnight, A Dovish ECB Hike, Stronger US Data

In post-Tokyo trade, JGB futures are weaker, closing -6 compared to settlement levels, after US tsys finished ~4bps cheaper across the major benchmarks on Thursday. Volatile trade was seen after the ECB monetary policy decision and the latest round of US data.

• The ECB raised rates to a record high of 4% but sent a clear message it was probably done with raising rates as economic growth slows. The statement said “…the Governing Council considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.” Lagarde did however add the caveat that she “can’t say that now we are at peak”.
• A spillover bid from EGBs, in lieu of a less hawkish than expected statement, saw US tsys firm before strong PPI and retail sales prints pressured US tsys to session lows.
• US retail sales rose 0.6% m/m versus expectations of +0.1%. Initial jobless claims rose 3k to 220k, roughly in line with consensus.
• A ~2% rise in WTI, which closed above $90/bbl, also weighed on the space.
• Today the local calendar is light with the Tertiary Industry Index as the sole release.