Futures Weaker, German Yields Higher On Higher Than Expected Inflation, 2Y Supply Today

In post-Tokyo trade, JGB futures are weaker, closing -7 compared to settlement levels, after the cash US tsy curve bear-steepened again on Wednesday, with yields were flat to 7bps higher. The 2-year finished flat at 4.97%, while the 10Y was +6bps at 4.61%. The 2y10y finished +6.776 at -36.296 and now 12bps off lows from May 28th.

• The FOMC's high-for-longer stance, along with another poor auction weighed on the US tsy market.
• The 7y note auction extended a string of weak sales this week, as the 7y tailed by 1.3bps (awarded at 4.650% vs. WI of 4.637%). The bid-to-cover of 2.43 was also soft and marked the lowest outright demand in a year. In response to the soft sale, the 7y yield extended pre-auction deadline gains, touching 4.6537%.
• There was also spillover from weakness in EGBs after stronger German inflation and wage data. German 10-year bunds closed 10bps higher at 2.69%.
• Yields have now risen in about 7 of the last 9 sessions, since May 15 and are back near the highs since November.
• Fed's Beige Book detailed 'modest' price growth across the survey period, but markets proved unresponsive ahead of key PCE data due Thursday and Friday, which markets expect to be a key input for June Fed decision.
• On the local calendar today, we have weekly offshore investment flows alongside 2-year supply.