Futures Stronger In Line With Gilt & Bund Rally

In post-Tokyo trade, JGB futures are stronger, closing +9 compared to settlement levels, after US tsys finished 3-4bp richer across major benchmarks. Tsys firmed through the European session in lieu of spillover from gilts as pre-UK CPI positioning dominated flows. Brief pressure came as US housing starts and housing permits were firmer than expected, however, a rally in bunds facilitated an extension of early gains in tsys.

• Focus now turns to Fed Chairman Powell's semi-annual testimony House Services Panel later today, though it's unlikely Chair Powell will deviate from last week's policy messaging.
• JGBs continue to operate above support at 147.34, the May 26 low. The contract has breached 148.41, the May 12 high. According to MNI’s technical team, this strengthens the bullish case and signals scope for a climb towards the next key resistance at 149.21/53, highs from May and March. Clearance of these levels would highlight an important break. To the downside, a breach of 147.34 would signal a stronger reversal and open 146.11, the Feb 22 low.
• The local data calendar is empty today, but we do have the BoJ minutes from the April meeting out, while BoJ Board Member Adachi will give a speech in Kagoshima.