Futures Are Stronger With US Tsys, Jobless Rate Higher

In post-Tokyo trade, JGB futures are stronger, closing +11 compared to settlement levels, after US tsys finished dealing on Monday 1-4bps richer across the major benchmarks. A light bull steepening was apparent.

• In a data light session, technical flows dominated US tsy trading as participants eyed Friday's NFP data. Solid 2- and 5-year auction results helped extend Monday's gains.
• FOMC dated OIS was stable, a terminal rate of ~5.50% was seen in November, and there are ~55bps of cuts priced to July 2024.
• According to MNI’s technicals team, JGB futures took out support at 146.50 last week to slip to 146.26, just above the Aug 3 low of 146.23. The bear trigger at 146.11, the Feb 22 low on the continuation contract, is yet to be tested with downside momentum likely to pick up on any break of that mark. Any return higher would target the May 12 high of 149.21 and 149.53, the Mar 22 high. Clearance of these levels would highlight an important break.
• The jobless rate and the job-to-applicant ratio for July print weaker than expected. The jobless rate rises to 2.7% from 2.5% and the job-to-applicant falls to 1.29 from 1.30.
• Today the MoF plans to sell Y2.9tn of 2-year JGBs.