Futures Weaker Overnight As Asian Session Gains For US Tsys Fade

In post-Tokyo trade, JGB futures are weaker, closing -14 compared to settlement levels, despite US tsys finishing the NY session with only a modest cheapening. Yields ended ~1bp higher after being ~2bps lower during the Asian session on the back of news that President Biden was pulling out of the election race.

• It seems very likely that Kamala Harris will be the Presidential Nominee for the Democrats with the focus now turning to her running mate, betting markets have Josh Shapiro as the favourite with a 32% chance followed by Andy Beshaer at 26% and Roy Cooper at 20%.
• There weren’t any major headlines causing the sell-off with some desks citing incoming Treasury coupon supply (2s, 5s, 7s and 2Y FRN) or possibly some hedging.
• Today, the US calendar will see Regional Fed and Existing Home Sales data and a $69bn 2Y Note auction.
• US equities rebounded, with the tech sector leading the gains after the recent rotation out of these stocks. The tech-heavy Nasdaq index is up ~1.5% against a ~1% rise in the S&P500.
• Today, the local calendar will see Machine Tool Orders data alongside BoJ Rinban Operations covering 1-10-year JGBs.