Futures Weaken After Domestic Data, Cash US Tsys Open Weaker

In Tokyo morning trade, JGB futures are sharply weaker than Friday's overnight closing levels, -16 compared to settlement levels.

• Labour cash earnings were a mixed bag. The headline estimates were a touch below market consensus expectations. The nominal headline rose 1.9%y/y, versus 2.1% forecast and 1.6% prior (which was revised down from an initial read of 2.1%). Real earnings remained comfortably negative at -1.4%y/y (forecast was -1.2% y/y and prior -1.2%).
• Still, an offset comes from the figures using the same sample base. They were stronger than forecast. Cash earnings rose 2.3%y/y (forecast 2.1%, prior 1.8%). Scheduled full-time pay was 2.7% y/y, versus 2.2% forecast and 2.1% prior. This rose a record in y/y terms, these metrics are presented below. All in all, this should add to the case for a further unwinding of the BoJ's accommodative stance.
• The Adjusted Current Account for May printed Y2406.2bn versus Y2051.0bn est. Bank Lending was +3.2% y/y versus +3.0% prior.
• Cash US tsys are ~2bps cheaper in today's Asia-Pac session after Friday’s strong post-Payrolls rally. It may reflect some profit-taking along with a reaction to yesterday’s French election result.
• Cash JGBs are flat to 2bps cheaper, with the 40-year leading.
• The swaps curve has bear-steepened, with rates flat to 2bps higher. Swap spreads are wider.