Futures Stronger Overnight, US Tsys Rally On Weak Data Ahead Of Fed Chair Powell’s Testimony

In post-Tokyo trade, JGB futures are stronger, closing +12 compared to settlement levels, after US tsys rallied 4-6bps across benchmarks, continuing the recent back and forth, ahead of Fed Chairman Powell's semi-annual policy testimony to Congress today and Thursday as well as NFP on Friday.

• Softer than expected ISM services and factory orders data underpinned the move lower in US tsy yields, erasing Monday's rise following more hawkish than expected comments from the Fed's Bostic.
• Risk-off sentiment also helped support US tsys as US equities tumbled, extending its recent slide, albeit from record or near record highs propelled by the AI frenzy.
• Six of the magnificent seven were lower. Adding to the negative sentiment, Apple’s iPhone sales in China slumped 24% in the first six weeks of the year according to independent research.
• The local data calendar is empty today, with Jan labor cash earnings in focus tomorrow. We also have BoJ speak tomorrow (by board member Nakagawa).
• (Bloomberg) -- One question is obsessing Tokyo’s financial markets — when will the Bank of Japan exit negative interest rates? The country’s biggest bank expects the move to come in two weeks and is positioning itself accordingly. (See link)