Futures Weaker Despite US Tsys Bull-Steepening, Market Focused On A March BoJ Hike

In post-Tokyo trade, JGB futures are cheaper, closing -18 compared to settlement levels, despite the US tsys curve bull-steepening, with yields flat to 5bps lower.

• (Bloomberg) -- Speculation surged that the Bank of Japan will move this month to raise interest rates for the first time since 2007 after a flurry of reports and wage figures helped drive up the yen, bond yields and overnight swaps. (See link)
• BoJ dated OIS currently assigns an 82% chance of a March 18-19 end to NIRP, with a cumulative probability of 86% for the April meeting.
• US tsys rallied through technical resistance early in the NY session on Thursday after lower-than-expected Unit Labor Costs (0.4% vs. 0.7% est). Weekly jobless claims were largely in line: (216k vs. 217k est). Additional data: Nonfarm Productivity (3.2% vs. 3.1% est); Trade Balance (-$67.4B vs. -$63.5B est).
• No new insight from Fed Chairman Powell on Thursday as he repeated yesterday's policy testimony to Congress.
• The S&P 500 reset its record high and record closing high with a gain of 0.9%.
• The market now awaits February US Non-Farm Payrolls later today.
• Today, the local calendar sees Household Spending, BoP Current Account, Bank Lending and Leading & Coincident Indices data.
• Today will also see BoJ Rinban operations covering 1- to 10-year JGBs.