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Futures Uptick Only Overnight Despite Strong US Tsy Rally

JGBS

In post-Tokyo trade, JGB futures have up-ticked, closing +5 compared to settlement levels, after US tsys extended their Nov-Dec rally.

  • Cash US tsys finished 5-10bps richer across the major benchmarks on Wednesday, with the long end leading the bid. US tsys shifted richer after softer than forecast Richmond Fed Mfg and Business Conditions. The gains then extended after the latest 5-year auction stopped through. The 10-year US tsy yield hit its lowest level since July (3.7833%).
  • Projected Fed rate cuts for early 2024 gained momentum: March 2024 has fully priced in a full 25bp cut, with a cumulative -54bps by May 2024 and -167bps by December 2024.
  • Later today the US calendar sees Weekly Claims, Retail/Wholesale Inventories and Home Sales. The US Treasury wraps up 2023's supply with a $40bn 7Y Note auction.
  • Today, the local docket is busy with November Retail Sales (exp 5.0% Y/Y) and flash November Industrial Production (exp -2.1% Y/Y) as well as weekly international security flow data.

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