Futures Lower Overnight AS US Tsys Bear-Steepen Following Fedspeak.

In post-Tokyo trade, JGB futures are cheaper, closing -12 compared to settlement levels, after US tsys cheapened 8-12bps after returning from the long holiday weekend. The big catalyst on the day was comments from Fed Waller who pushed back against aggressive rate cut expectations.

• The AFR reported that Goldman Sachs said Fed governor Christopher Waller’s comments “raise the risk that the first cut could come slightly later than our forecast of March and that the pace of cuts could be quarterly from the outset, rather than our forecast of three initial consecutive cuts followed by a switch to a quarterly pace. We do not see his comments as necessarily at odds with our forecast, however, and have not made any changes to our baseline of a first cut in March and five cuts total in 2024.”
• US tsys had earlier rallied following a sharp drop in NY Empire manufacturing data (-43.7, the lowest since the depths of the pandemic in Apr/May'20 and lower than anything seen in 2008/09.)
• Today, the local calendar is empty.
• China December industrial production, retail sales and fourth quarter GDP are the highlights of today’s Asian calendar.
• Looking further ahead: Heavy US data calendar includes Retail Sales, Import/Export $, IP/Cap-U, Fed speakers: Barr, Bowman and Williams, US Treasury auctions $13.B 20Y Bond re-open.