Futures Uptick In Overnight Trade Ahead of Weekend, Debt Ceiling Deal Done

During post-Tokyo trade ahead of the weekend, there was an uptick in JGB futures, closing +2 compared to settlement levels. This followed the flattening of the 2s10s US tsy yield curve in NY trading before the weekend, which was triggered by stronger-than-expected core PCE inflation in April, registering at 0.38% month-on-month (compared to the estimated 0.3%).

• Since then, a bipartisan agreement to suspend the debt limit for the next two years while keeping non-defence spending flat for the next year (+1% in the second year) was announced Saturday. Now comes the hard part: securing support from enough lawmakers on both sides of the aisle. The NY Times writes Republican "lawmakers have a history of doing everything they can to block spending deals they disapprove of. They could do so again, and they have sufficient power to kill the deal because McCarthy has only a nine-vote majority."
• On the local data front today we have final March readings for the coincident and leading indices, with neither release likely to move sentiment. As the week progresses, it is anticipated that the data will reveal a rise in production and a tightening of the job market, primarily due to the recovery of automakers from supply-chain disruptions.
• BoJ Rinban operations covering 3-25-year+ JGBs are slated today ahead of 2-year supply tomorrow.