JGBS: Futures Stronger Overnight With US Tsys, PPI Services Data Due

In post-Tokyo trade, JGB futures are stronger, +10 compared to settlement levels, after the US tsy curve bull-steepened, with yields finishing 1-5bps lower.  

• Risk appetite was buoyed overnight following the hefty easing from Chinese authorities yesterday. The Nasdaq Composite paced US equities modestly higher, while commodities advanced on improving growth expectations.
• There was a 2-year $69 billion bond auction overnight which drew the expected yield of 3.520%, the lowest for a two-year note auction since August 2022 while the bid/cover ratio was slightly down from prior at 2.590x. The solid reception to the 2-year auction reinforced the ongoing demand for the front end of the curve.
• Data was markedly weaker than expected in September. Consumer confidence fell to 98.7 (cons 104.0) for a sizeable slip after an upward revised 105.6 (initial 103.3) in Aug. Declines were seen in both the present situation and expectations components. The difference between those saying jobs were plentiful and those saying jobs were hard to get narrowed for an eighth successive month.
• Bank of Japan Governor Kazuo Ueda said on Tuesday the BoJ sees great uncertainty over the timing and ability of the U.S. to achieve a soft-landing.
• Today, the local calendar will see PPI Services data alongside BoJ Rinban Operations covering 1- to 25-year JGBs and Inflation-Indexed Bonds.