JGBS: Futures Weaker Overnight, Labour Earnings Softer Than Expected

In post-Tokyo trade, JGB futures are cheaper, closing -23 compared to settlement levels, after US tsys saw a second straight day of heavy selling. US tsys finished near their cheaps, with the 2-year yield 12bps higher at 4.48% and the 10-year at 4.17%, 15bps higher on the day.

• Carryover weakness following Fed Chairman Powell's 60 Minutes interview on Sunday underscored a more cautious view regarding rate cuts.
• US tsys extended weakness after stronger-than-expected ISM Services across all items, especially prices. ISM Services bounced more than expected in January to 53.4 (cons 52.0) after 50.5 in Dec – joint highest since Sept. Prices paid far stronger than expected 64.0 (cons 56.7) after 56.7 – highest since Feb’23 after the strongest monthly increase since mid-2012.
• Labour and Real Cash Earnings have just printed 1.0% y/y and -1.9% y/y respectively versus expectations of +1.4% and -1.5% and prior +0.7% and -2.5%. Household Spending showed -2.5% y/y versus -2.0% est. and -2.9% prior. The data is likely to provide support for the market in early Tokyo trading.
• Japan’s annual wage negotiations have kicked off in earnest, drawing increased attention as the Bank of Japan looks for evidence of a virtuous wage-price cycle that would allow it to exit from the world’s last negative rate regime. (See BBG link)
• BoJ Governor Ueda is scheduled to appear in Parliament from 1.41 pm - BBG