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Free AccessFutures Sharply Weaker, 20Y Supply Due
In post-Tokyo trade, JGB futures are sharply weaker, closing -20 compared to settlement levels, after US tsys finished 3-5bps cheaper ahead of Thursday's PPI and Retail Sales data. The US 2-year yield was up 5bps at 4.63% while the 10-year yield rose 4bps to 4.19%. Trading was cautious ahead of 30-year supply, but the auction attracted decent demand with bid-cover the highest since June.
- A stronger-than-expected retail report could further dent hopes, and dampen market sentiment, for a mid-June rate pivot by the Federal Reserve.
- Projected rate cut pricing over the next three FOMC meetings continues to evaporate: March 2024 chance of a 25bp rate cut is currently at 1.5%; May 2024 at a cumulative 12% and June 2024 at a cumulative 59%.
- Focus in Japan will remain on next week's BoJ meeting. BBG noted the bank is considering scrapping ETF buying but maintaining bond purchases (headlines crossed late yesterday, see this link).
- Nikkei also reported that the BoJ will discuss ending NIRP at next week's meeting (see this link).
- Today, the local calendar sees weekly International Investment Flow data, along with 20-year supply.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.