Futures Stronger In Overnight Dealings Ahead Of the Weekend

In post-Tokyo trade ahead of the weekend, JGB futures were stronger, closing +8 compared to settlement levels, after cash US tsys finished 3-6bps richer across benchmarks on Friday. An in-line PCE Deflator and lower-than-expected MNI Chicago PMI data prevented further erosion in the Fed outlook. The market is still priced for at least one rate cut this year, though it is not fully priced until December.

• According to MNI’s technicals team, US 10-year futures remain vulnerable and last week’s move lower reinforced the current bearish theme. This move down marks an extension of the reversal from the May 16 high. Initial support rests at 107-31 (May 29 lows), while initial resistance holds just above currently levels at 109-00 (May 31 highs) a break here we opened a move to 109-13 (50-day EMA).
• The Japan 2-year to 10-year yield curve will flatten to 60 basis points by the end of the third quarter, from the current 67 basis points, based on Bloomberg surveys of market forecasts.
• Today on the data calendar we have Q1 Capex and company profits data, along with the final May PMI read.