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JGBS: Futures Weaker Overnight, BoJ Rinban & 1Y Supply Due

JGBS
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In post-Tokyo trade, JGB futures are weaker, -8 compared to settlement levels, after US tsys finished weaker across benchmarks. US yields briefly fell to one-week lows at the NY open. 

  • Generally, the session reflected position squaring ahead of today’s FOMC policy announcement. The markets still project closer to a 50bp cut than a 25bp move from the Fed.
  • The US 2-year underperformed, rising 5bps to 3.60% after hitting 3.55% Monday, the lowest since September 2022. The 10-year rose 3bps to 3.65% after closing at 3.62% Monday, the richest since June 2023.
  • US retail sales and industrial production data gave few clues for the Fed outcome. Retail Sales headline beat with a slight upward revision to prior data (0.1% M/M (vs -0.2%, 1.1% prior rev up 0.1pp). Meanwhile, Industrial production was much stronger than expected in August at 0.8% M/M (cons 0.2) but there was a downward revision.
  • US equities finished narrowly mixed.
  • The BoJ board will consider leaving its policy interest unchanged at 0.25% when it hands down its decision on Friday, despite the economy and prices largely moving in line with projections.
  • Today, the local calendar will see Trade Balance and Core Machine Orders data alongside 1-year supply and BoJ Rinban Operations covering 1-25-year JGBs.  
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In post-Tokyo trade, JGB futures are weaker, -8 compared to settlement levels, after US tsys finished weaker across benchmarks. US yields briefly fell to one-week lows at the NY open. 

  • Generally, the session reflected position squaring ahead of today’s FOMC policy announcement. The markets still project closer to a 50bp cut than a 25bp move from the Fed.
  • The US 2-year underperformed, rising 5bps to 3.60% after hitting 3.55% Monday, the lowest since September 2022. The 10-year rose 3bps to 3.65% after closing at 3.62% Monday, the richest since June 2023.
  • US retail sales and industrial production data gave few clues for the Fed outcome. Retail Sales headline beat with a slight upward revision to prior data (0.1% M/M (vs -0.2%, 1.1% prior rev up 0.1pp). Meanwhile, Industrial production was much stronger than expected in August at 0.8% M/M (cons 0.2) but there was a downward revision.
  • US equities finished narrowly mixed.
  • The BoJ board will consider leaving its policy interest unchanged at 0.25% when it hands down its decision on Friday, despite the economy and prices largely moving in line with projections.
  • Today, the local calendar will see Trade Balance and Core Machine Orders data alongside 1-year supply and BoJ Rinban Operations covering 1-25-year JGBs.