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Futures Higher Overnight With US Tsys, Focus On Today’s BoJ Policy Decision

JGBS

In post-Tokyo trade, JGB futures (JBU4) are stronger, closing +17 compared to settlement levels, after US tsys reversed Wednesday’s post-FOMC cheapening following yesterday's softer PPI and higher weekly claims.

  • PPI final demand printed lower than expected at -0.2% vs. 0.1% m/m (2.2% y/y vs. 2.5% est), Ex Food and Energy m/m 0.0% vs. 0.3% est, (y/y 2.3% vs. 2.5%). Meanwhile, weekly jobless claims were higher than expected at 242k vs. 225k est.
  • US tsys also received a boost from a strong $22bn 30Y auction reopening.
  • 2- and 10-year US tsy yields finished 5bps and 7bps lower, which took them back to, or below, the levels before the FOMC Decision.
  • (AFR) In a note, Morgan Stanley said: “We continue to see three cuts this year, starting in September, informed by our core PCE forecasts that reach a three-month annualised pace of 2.5 per cent ahead of the meeting. Inflation continues to move convincingly lower, and the Fed cuts every meeting through mid-2025.”
  • Nevertheless, attention is squarely focused on today’s BoJ Policy Decision. We anticipate the BoJ will leave its policy rate unchanged, in line with consensus. Accordingly, the market's focus is likely on whether there is any announcement regarding balance sheet policy and the future pace of JGB purchases. (See MNI BoJ Preview here)
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In post-Tokyo trade, JGB futures (JBU4) are stronger, closing +17 compared to settlement levels, after US tsys reversed Wednesday’s post-FOMC cheapening following yesterday's softer PPI and higher weekly claims.

  • PPI final demand printed lower than expected at -0.2% vs. 0.1% m/m (2.2% y/y vs. 2.5% est), Ex Food and Energy m/m 0.0% vs. 0.3% est, (y/y 2.3% vs. 2.5%). Meanwhile, weekly jobless claims were higher than expected at 242k vs. 225k est.
  • US tsys also received a boost from a strong $22bn 30Y auction reopening.
  • 2- and 10-year US tsy yields finished 5bps and 7bps lower, which took them back to, or below, the levels before the FOMC Decision.
  • (AFR) In a note, Morgan Stanley said: “We continue to see three cuts this year, starting in September, informed by our core PCE forecasts that reach a three-month annualised pace of 2.5 per cent ahead of the meeting. Inflation continues to move convincingly lower, and the Fed cuts every meeting through mid-2025.”
  • Nevertheless, attention is squarely focused on today’s BoJ Policy Decision. We anticipate the BoJ will leave its policy rate unchanged, in line with consensus. Accordingly, the market's focus is likely on whether there is any announcement regarding balance sheet policy and the future pace of JGB purchases. (See MNI BoJ Preview here)