Futures Weaker Overnight, US Yields Pressured By Oil, Durable Goods & Fedspeak

In post-Tokyo trade, JGB futures are weaker, closing -11 compared to settlement levels, after US tsys finished 4-8bps cheaper across the major benchmarks. The belly of the US curve underperformed with the 5-7-year yields rising 8bps despite a solid 5-year auction. The 2-year and 10-year yields finished 7bps higher at 5.135% and 4.61%, respectively.

• Pressure was seen after the latest Durable Goods data was stronger than forecast, however, there was a strong downward revision to the July number.
• Minneapolis Fed President Kashkari said that if inflation persists the Fed may have to hold rates steady through 2024, the latest dot plot showed rate cuts in 2024.
• In a tweet, economist David Rosenberg said: “The Fed always gets what it wants. This policy overshoot will lead to a recession, likely some sort of credit event, a shift towards disinflation/deflation and far lower bond yields even if from higher levels than today.”
• WTI extended recent gains, rising ~3.5%, as inventories fell to the lowest since July 2022.
• Today the local calendar sees International Investment Flow data, along with 2-year supply.
• Later today sees Initial Jobless Claims and 3rd read of US GDP. Fedspeak from Chair Powell and Chicago Fed President Goolsbee is due, along with 7-year US tsy supply.