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Futures Weaker With US Tsys, NY Fed Williams Weighs, Light Local Calendar

JGBS

In post-Tokyo trade, JGB futures are weaker, closing -5 compared to settlement levels, after US tsys were relatively steady, ranging from flat to 2bps cheaper, contributing to a steeper yield curve. The US tsy 10-year closed 2bps higher at 4.03%, sustaining the recent trend of closures above the 4% mark.

  • There was limited US data overnight. US tsys and equities did, however, dip late after NY Fed President John Williams said he expects the central bank to keep a restrictive stance for some time and to begin rate cuts only when confident inflation is moving toward 2% on a sustained basis, also noting a slowing of QT does not seem to be close.
  • Markets await US CPI/PPI later today and Friday. The realisation of still relatively sticky core CPI inflation could help continue a trimming of Fed rate cut expectations compared to those extremes seen late last year, despite that move pausing in the past few sessions.
  • An ex-BoJ board member stated April was the likely window for when the central bank would exit negative interest rates (see this BBG link).
  • Today, the local calendar is relatively light, with Tokyo Avg Office Vacancies and Leading & Coincident Indices as the highlights.

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