Futures Lower, US Tsys Pressured By Ratings Warning, Tokyo Headline CPI Misses

In post-Tokyo trade, JGB futures are weaker, closing -28 compared to settlement levels, after US tsys finished 1-16bps cheaper across the major benchmarks with the curve flatter. The impasse over the US debt ceiling continues to weigh on tsys, negative ratings watch warnings from Fitch and DBRS Morningstar adding to the pressure. House Leader McCarthy noted that he is optimistic a deal can be struck before June 1.

• On the data front, US GDP was revised up slightly in Q1 to an annualised 1.3%. The core PCE deflator was revised higher by 0.1% to a 5.0% annual rate in Q1.
• Tokyo CPI prints a headline rate of 3.2% y/y in May versus expectations of 3.4%. The core measure (ex-fresh food) prints 3.2% y/y (3.4% est.), while core-core (excluding energy as well), shows 3.9% y/y (3.9% est.). This may provide some support for the market in early Tokyo trade.
• PPI services for Apr are due later, 1.4% is the forecast, prior was 1.6%.
• BoJ Governor Ueda indicated his desire to hold on to policy flexibility by playing down the importance of wages or any single economic dataset as a trigger for change. (link)
• Japan’s government raised its monthly economic assessment in May for the first time in 10 months as consumption, production and exports improved. (link)