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JGBS: Futures Slightly Firmer Overnight, Light Local Calendar

JGBS
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In post-Tokyo trade, JGB futures are slightly firmer, +5 compared to settlement levels, after US tsys finished the NY session with a modest extension of yesterday’s sharp sell-off. The US 2-year yield increased 2bps to 4.03% with the 10-year fractionally higher at 4.21%. The 10-year yield ~60bps higher than the mid-September low. 

  • Investor sentiment towards fixed income is being impacted by the upcoming US election, and the prospect of larger fiscal deficits, along with uncertainty about the path of interest rate cuts.
  • European bond yields also closed higher with 10-year bunds increasing 4bps to 2.32% after ECB officials saw market pricing of approximately six consecutive cuts as overly aggressive.
  • In the latest World Economic Outlook, the IMF lowered its global growth forecast for next year and highlighted risks from geopolitics and trade protectionism. It expects global output will expand 3.2%, down 0.1% from its July estimate. The IMF is seeing more sustainability in Japan's inflation outlook and expects further gradual rate rises in coming years (see this BBG link).
  • The local data calendar remains empty until tomorrow's Oct preliminary PMIs and weekly investment flows. Tomorrow will also see 20-year supply. 
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In post-Tokyo trade, JGB futures are slightly firmer, +5 compared to settlement levels, after US tsys finished the NY session with a modest extension of yesterday’s sharp sell-off. The US 2-year yield increased 2bps to 4.03% with the 10-year fractionally higher at 4.21%. The 10-year yield ~60bps higher than the mid-September low. 

  • Investor sentiment towards fixed income is being impacted by the upcoming US election, and the prospect of larger fiscal deficits, along with uncertainty about the path of interest rate cuts.
  • European bond yields also closed higher with 10-year bunds increasing 4bps to 2.32% after ECB officials saw market pricing of approximately six consecutive cuts as overly aggressive.
  • In the latest World Economic Outlook, the IMF lowered its global growth forecast for next year and highlighted risks from geopolitics and trade protectionism. It expects global output will expand 3.2%, down 0.1% from its July estimate. The IMF is seeing more sustainability in Japan's inflation outlook and expects further gradual rate rises in coming years (see this BBG link).
  • The local data calendar remains empty until tomorrow's Oct preliminary PMIs and weekly investment flows. Tomorrow will also see 20-year supply.