Futures Weaker Overnight, US Tsys Bear Steepen

In post-Tokyo trade, JGB futures are cheaper, closing -16 compared to settlement levels, after US tsys finished 5-11bps cheaper across the major benchmarks, the curve bear steepened. US tsys reversed the bull flattening seen on Friday and sit at post-US CPI levels. Although geopolitical tensions remain high the reversal is attributed to no further escalation in the Israel/Hamas conflict as of yet. A firmer-than-forecast Empire Mfg print weighed on the space. The six-month ahead metric is at pre-pandemic levels.

• Fedspeak from Harker crossed early in today’s Asian session, where he noted that the Fed shouldn't be thinking about rate increases.
• Later today, the US calendar sees retail sales, business inventories and industrial production. Fedspeak from Williams, Bowman and Barkin are also due.
• Today, the local calendar is light, with the Tertiary Industry Index as the sole release.
• Also today, the MOF plans to sell Y1.2tn of 20-year JGBs. The issuance of 20-year JGBs today comes after a successful absorption of 20-year supply in September. However, it also follows a series of mixed to subpar outcomes for the October supply of 10- and 30-year JGBs.