Futures Uptick in Post-Tokyo Trade, US Tsys Richer, 10-year Supply Due

In post-Tokyo trade, JGB futures uptick, closing +9 compared to settlement levels, after US tsys strengthen 3-7bp across the major benchmarks. The NY session did see volatility after a downside miss for MNI Chicago PMI, higher than expected JOLTS job openings and then Jefferson (voter) and Harker ('23 voter) showing support for skipping a June hike. The lead-in from Europe was also supportive after German CPI declined from 7.6% y/y to 6.3% in May, surpassing expectations by 0.4ppts. Similar downside surprises were observed in Spanish and French CPI data.

• The Wall Street Journal's Nick Timiraos writes: Federal Reserve officials signalled they are increasingly likely to hold interest rates steady at their June meeting before preparing to raise them again later this summer. The strategy would give officials more time to study the economic effects of the Fed’s 10 consecutive prior rate rises, as well as recent banking stress, by spacing out further increases.
• The local data calendar has Q1 Capital Spending and Company Profits data on tap. Capex is expected to moderate, likewise for profits in y/y terms. Also out is weekly Investment Flow data (to May 26), then the final Manufacturing PMI for May.
• The MoF also plans to sell Y2.7tn of 10-year JGBs after last month’s auction looked particularly weak with the cover ratio falling to the lowest level observed at a 10-year JGB auction since August ’22 and the low price failing to meet wider expectations.