Futures Downtick Overnight On Friday, BoJ Decision Tomorrow

In post-Tokyo trade on Friday, JGB futures downticked, closing -4 compared to settlement levels, after US tsys cheapened for another session. The 2-year US tsy yield finished 3bps higher at 4.73% while 10-year yields ended up 2bps at 4.31%.

• These US yields now stand over 20bps higher than their levels at the beginning of last week, driven by concerns surrounding persistent inflation. This inflationary pressure raises questions about the extent of potential monetary easing that policymakers might signal at the forthcoming FOMC meeting. Consequently, market expectations for the first 25 basis point Fed rate cut have been pushed back to July.
• University of Michigan consumer sentiment was slightly softer than median expectations but is still consistent with resilient consumption growth. Separately, consumers 5 to-10-year inflation expectations were stable at 2.9%.
• The main focus late on Friday Asia Pac time was the Rengo wage announcement. It printed stronger than expected at 5.28%, with a number of sell-side analysts looking for a low 5% outcome. It was also comfortably above the initial outcome for last year's wages agreement (3.8%). A number of new wires (Kyodo and Nikkei) posted reports (after the wages announcement, link) that the central bank will raise the policy rate to the 0%-0.1% range at Tuesday's policy announcement.
• Today, the local calendar sees Core Machine Orders.