Futures Sharply Lower After Strong US Data & Supply Concerns Weigh On US Tsys

In post-Tokyo trade, JGB futures are sharply lower, closing at -31 compared to settlement levels, after US tsys observed a bear-steepening of the curve in the NY session.

• This move was supported by unexpectedly robust data on new home sales, which added to concerns that the ongoing strength of the US economy will keep a Fed rate hike on the agenda later in the year or early 2024. It has also added to expectations of a significant increase in Q3 GDP later today.
• Weakness in US tsys was also fueled by expectations of next week's announcements regarding larger auction sizes, coupled with lacklustre demand metrics witnessed at the US$52bn 5-year note auction.
• According to MNI’s technicals team, JGB futures’ continuation lower and the clear break of support at 145.49, the Aug 17 low, confirms a resumption of the medium-term downtrend and paves the way for weakness towards 144.15, the Jan 13 low, and major support. On the upside, clearance of 146.41, the Sep 4 high, would instead highlight a base and a possible short-term reversal.
• Today, the local calendar sees PPI Services, International Investment Flows and Machine Tool Orders data.