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JGBS: Futures Weaker Overnight With US Tsys, Cash Earnings Mixed

JGBS
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In post-Tokyo trade, JGB futures are weaker, -7 compared to settlement levels, after US tsys extended Friday’s post-payrolls sell-off. Cash US tsys bear-flattened, with yields 5-8bps higher. The US 10-year yield finished 6bps higher at 4.02% - first time back above 4.0% since August.  The 2-year yield increased 7bps to 4.0%.

  • Labor and Real Cash Earnings for August printed % y/y and % y/y respectively versus estimates of % and % and priors of % and %.
  • Market participants continued to adjust to Friday's strong September US jobs report and price out aggressive rate cut expectations. Fed funds futures have not only taken out risks for a 50bp cut next month but now reflect the chance of no action. The implied November contract shows -19bps in easing, with December at -44bps.
  • Limited if any reaction to Fed speakers yesterday. MN Fed President Kashkari said risks of higher inflation are waning as he defended his 50bp rate cut decision, seeing a neutral rate at around 3%.
  • Limited US data today, with the focus on the minutes for the September FOMC tomorrow, CPI on Thursday and PPI on Friday. Note, that Friday also sees the start of the latest earnings cycle with Bank of NY Mellon, Wells Fargo, JP Morgan and Blackrock announcing.
  • Today, the local calendar will also see Household Spending and Current Account Balance data alongside 30-year supply.
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In post-Tokyo trade, JGB futures are weaker, -7 compared to settlement levels, after US tsys extended Friday’s post-payrolls sell-off. Cash US tsys bear-flattened, with yields 5-8bps higher. The US 10-year yield finished 6bps higher at 4.02% - first time back above 4.0% since August.  The 2-year yield increased 7bps to 4.0%.

  • Labor and Real Cash Earnings for August printed % y/y and % y/y respectively versus estimates of % and % and priors of % and %.
  • Market participants continued to adjust to Friday's strong September US jobs report and price out aggressive rate cut expectations. Fed funds futures have not only taken out risks for a 50bp cut next month but now reflect the chance of no action. The implied November contract shows -19bps in easing, with December at -44bps.
  • Limited if any reaction to Fed speakers yesterday. MN Fed President Kashkari said risks of higher inflation are waning as he defended his 50bp rate cut decision, seeing a neutral rate at around 3%.
  • Limited US data today, with the focus on the minutes for the September FOMC tomorrow, CPI on Thursday and PPI on Friday. Note, that Friday also sees the start of the latest earnings cycle with Bank of NY Mellon, Wells Fargo, JP Morgan and Blackrock announcing.
  • Today, the local calendar will also see Household Spending and Current Account Balance data alongside 30-year supply.