Futures Cheaper As US Nominal & Real 10Y Yields Hit Multiyear Highs

In post-Tokyo trade, JGB futures are weaker, closing -11 compared to settlement levels, after the US tsy 10-year yield reached 4.35%, the highest level since 2007, before finishing at 4.34%. The real 10-year TIPS yield also reached a milestone, hitting 2% for the first time since 2009. The curve continues to steepen with the 2-year rate up 4bps from the Friday close, at 4.98% and the 10-year rate currently up 8bps to 4.34%.

• The move comes ahead of a tsy auction of $8bn 30-year TIPS towards the end of the week and ahead of that, $16bn of the out-of-favour 20-year nominal tsys.
• The pivotal economic event of this week centres on the speech by Fed Chair Powell at the Jackson Hole gathering on Friday.
• Elsewhere, seven London banks slashed their growth forecasts for the world’s second-largest economy on Monday after what was dubbed “disappointing” and “piecemeal” support measures from the central bank. China is facing a “downward economic spiral” amid a mounting crisis in its debt-laden property sector, analysts have warned.
• Today the local calendar is empty, apart from Liquidity Enhancement Auction for OTR 5-15.5-Year JGBs.