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Futures Weaker As US Tsys Bear-Steepen After US CPI Data & 30Y Supply


In post-Tokyo trade, JGB futures are sharply weaker, closing -32 compared to settlement levels, after US tsys finished 9-16bps cheaper across the major benchmarks, the curve bear steepened.

  • US tsys were pressured after Wednesday's CPI print was firmer than expected. Headline CPI rose 0.396% in September, ~0.1% higher than expected. Notably, the services component, excluding housing and energy, rose 0.6% m/m. Moreover, the Cleveland Fed’s mean and trimmed mean measures and the Atlanta Fed’s sticky CPI measure all showed a pick-up in core inflation for the second consecutive month.
  • US tsy losses extended after the latest 30-year supply tailed, with a weaker than the average bid/cover ratio observed. This development has raised concerns that a potential lack of demand for US tsys could drive rates to retest recent highs, with the 10-year yield possibly making a push towards the 5% mark.
  • Oil pared gains after US crude stockpiles rose 10.2 million barrels, the biggest increase since February, providing a buffer against heightened geopolitical risks in Israel and Gaza.
  • Today the local calendar sees Weekly International Investment and M2 & M3 Money Flows.

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