JGBS: Trading To Resume After Yesterday’s Holiday

In post-Tokyo trade on Friday, JGB futures were stronger, +22 compared to settlement levels. The market was closed yesterday for a public holiday.

• The US tsy curve twist-steepened overnight, with yields closing -0.5bps to +1bps. The 2yr closed -0.4bps at 3.587%, while the 10yr closed +0.8bps at 3.749%. The 2s10s hit a new high of 18, before closing the session +1.4bps at 16.
• US equities set new highs as the FOMC’s 50bp cut reverberated. Fed speakers overnight indicated more cuts are in the future. However, comments suggested there is a high bar for an additional 50bps cut this year.
• There was some volatility for US tsys with initial support seen following increased tensions in the Middle East. However, this was quickly unwound after Iran's president said he was willing to ease tensions.
• US tsys also extended selling after Flash PMIs showed renewed price pressures but softer employment. Manufacturing: 47.0 (cons 48.6) in Sept prelim after 47.9 in Aug; Services: 55.4 (cons 55.2) after 55.7; Composite: 54.4 (cons 54.3) after 54.6.
• Today, the local calendar will see Jibun Bank PMIs along with an Enhanced Liquidity Auction covering 1-5-year OTR JGBs.