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JGBS: Futures Weaker Overnight Despite Richer US Tsys

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In post-Tokyo trade, JGB futures are weaker, -13 compared to settlement levels, despite US tsys finishing with yields 2-5bps lower. The 2yr finished -3bps at 3.55%, while the 10yr closed -3bps at 3.62%. The 2s10s made a new high of 9.809, before closing the session -0.220 at 6.465.

  • Rising expectations for a 50bp rate cut on Thursday helped support a rally in US tsys. Projected rate hikes through year-end look largely steady vs. Monday levels: Sep'24 cumulative -41.0bp (-40.6bp), Nov'24 cumulative -78.2bp (-79.1bp), Dec'24 -119.8bp (-120.0bp).
  • Lower rates supported US equities but have worked against the USD, which was broadly weaker.
  • Gold made another new closing high, rising 0.2% to $2577.70 per ounce amid dollar weakness and the dovish rate outlook.
  • Oil rallied ~2.5%, also supported by the slip in the dollar, further declines in Libyan exports, and expectations a bigger Fed rate cut will boost economic activity and demand.
  • Today the US calendar will see Retail Sales, Industrial Production and a 20y bond auction.
  • Today, the local data calendar has the July tertiary industry index on tap this afternoon, which is unlikely to be a market mover.
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In post-Tokyo trade, JGB futures are weaker, -13 compared to settlement levels, despite US tsys finishing with yields 2-5bps lower. The 2yr finished -3bps at 3.55%, while the 10yr closed -3bps at 3.62%. The 2s10s made a new high of 9.809, before closing the session -0.220 at 6.465.

  • Rising expectations for a 50bp rate cut on Thursday helped support a rally in US tsys. Projected rate hikes through year-end look largely steady vs. Monday levels: Sep'24 cumulative -41.0bp (-40.6bp), Nov'24 cumulative -78.2bp (-79.1bp), Dec'24 -119.8bp (-120.0bp).
  • Lower rates supported US equities but have worked against the USD, which was broadly weaker.
  • Gold made another new closing high, rising 0.2% to $2577.70 per ounce amid dollar weakness and the dovish rate outlook.
  • Oil rallied ~2.5%, also supported by the slip in the dollar, further declines in Libyan exports, and expectations a bigger Fed rate cut will boost economic activity and demand.
  • Today the US calendar will see Retail Sales, Industrial Production and a 20y bond auction.
  • Today, the local data calendar has the July tertiary industry index on tap this afternoon, which is unlikely to be a market mover.