Futures Weaker Overnight, US Tsys Await Non-Farm Payrolls

In post-Tokyo trade, JGB futures are weaker, closing -9 compared to settlement levels, despite US tsys finishing the NY session little changed.

• US yields closed off their highs as jobless claims and productivity were supportive for the market at the margin. US initial jobless claims rose 8k last week to 229k, but seasonal adjustments were seen as a factor. Attention now turns to Non-Farm Payrolls later today.
• European yields were slightly higher after the ECB’s “hawkish cut”. The ECB lowered its policy rate by 25bps to 3.75%. While the Governing Council noted progress in bringing down inflation it added “domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year.” Inflation forecasts were revised, with inflation not back to target until 2026.
• Regarding the policy outlook, the ECB said it “will keep policy rates sufficiently restrictive for as long as necessary”. In the press conference, President Lagarde was non-committal on the timing of the next rate cut.
• (Bloomberg) The BoJ will hold monetary policy steady at its two-day meeting ending June 14, according to 32 responses in a Bloomberg survey of 51 economists. (See link)
• Today, the local calendar will see Household Spending data and Coincident and Leading Indices alongside BoJ Rinban Operation covering 1-3-year and 5-25-year JGBs.