Futures Stronger, US Tsys Supported By Jobless Claims & Lower Oil Price

In post-Tokyo trade, JGB futures are stronger, closing at +15 compared to settlement levels, after US tsys finished 4-9bp richer across the major benchmarks with the belly leading. Tsys firmed off session lows as initial jobless claims printed at their highest level since October 2021 (+261k vs. 235k prior).

• Oil also proved to be a supportive factor for US tsys. Oil slumped sharply, amid a Middle East Eye report about a potential US and Iran interim deal ‘on nuclear enrichment and oil exports’, but most of the fall was reversed after the US denied the report.
• Ahead of next week's ECB policy meeting, the final Q1 estimate of Eurozone GDP has been revised, indicating a contraction of -0.1% (1.0% y/y). Market pricing and analysts are anticipating a 25bp rate hike from the ECB.
• Locally, there is a focus on whether PM Kishida will call an early election, potentially in July or August (link).
• Fitch also noted prohibitive hedging costs were reducing the appeal of overseas bonds for Japanese investors, a well-worn theme in markets this year (link).
• The local calendar today sees M2 & M3 data. China is slated to release May CPI/PPI data.
• Today will also see BoJ Rinban operations covering 1-10 years and 25-year+ JGBs.