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Futures Weaker Overnight After Q1 US ECI Weighs On US Tsys

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In post-Tokyo trade, JGB futures are weaker, closing -21 compared to settlement levels, after US tsys were pressured again by stronger-than-expected inflation data and cheapened ahead of the FOMC meeting today. The unexpected strength in inflation-related data added weight against any potential rate cuts.

  • The employment cost index (ECI), which is closely monitored by the Federal Reserve, rose by 1.2% in Q1 versus +0.9% est.
  • Reflecting this sentiment, the 2-year yield climbed by 6bps, closing at 5.04%. This marked the first time since November 13th that it surpassed the 5% threshold on a closing basis. Amid speculations of prolonged elevated rates, the belly of the yield curve exhibited weakness, with the 5-year maturity experiencing a more than 7bps uptick to 4.715%. Similarly, the 10-year rate increased by 7bps to 4.68%, just shy of the 4.70% mark.
  • (Bloomberg) Japanese yen intervention -- assuming that’s what it was -- doesn’t seem to have had a lasting chilling effect, and several indicators point to further weakness in the currency. (See link)
  • Today, the local calendar will see Jibun Bank PMI Mfg (F) data ahead of the BoJ Minutes of the March Meeting.
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In post-Tokyo trade, JGB futures are weaker, closing -21 compared to settlement levels, after US tsys were pressured again by stronger-than-expected inflation data and cheapened ahead of the FOMC meeting today. The unexpected strength in inflation-related data added weight against any potential rate cuts.

  • The employment cost index (ECI), which is closely monitored by the Federal Reserve, rose by 1.2% in Q1 versus +0.9% est.
  • Reflecting this sentiment, the 2-year yield climbed by 6bps, closing at 5.04%. This marked the first time since November 13th that it surpassed the 5% threshold on a closing basis. Amid speculations of prolonged elevated rates, the belly of the yield curve exhibited weakness, with the 5-year maturity experiencing a more than 7bps uptick to 4.715%. Similarly, the 10-year rate increased by 7bps to 4.68%, just shy of the 4.70% mark.
  • (Bloomberg) Japanese yen intervention -- assuming that’s what it was -- doesn’t seem to have had a lasting chilling effect, and several indicators point to further weakness in the currency. (See link)
  • Today, the local calendar will see Jibun Bank PMI Mfg (F) data ahead of the BoJ Minutes of the March Meeting.