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Labor Earnings Beat, Likely To Pressure JGBs

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In post-Tokyo trade, JGB futures are weaker, closing -13 compared to settlement levels, despite US tsys bull-flattening (yields finished flat to 6bps lower) following Fed Chair Powell’s testimony to Congress, where he reiterated the Fed’s view of cutting interest rates "at some point this year" but not until it becomes more confident that inflation will keep falling.

  • Labor and Real Cash Earnings surprise on the upside printing +2.0% y/y and -0.6% y/y respectively versus expectations of +1.2% and -1.5% and revised priors of +0.8% and -2.1%. These numbers are likely to pressure JGBs in the early rounds of the Tokyo session.
  • (MNI) The latest insight from our Tokyo policy team (out late yesterday) suggests NIRP could be ended in March (See link).
  • (Bloomberg) -- Bank of Japan officials are getting more confident over the strength of wage growth, according to people familiar with the matter, a development that supports the view among traders and economists that the BOJ will scrap its negative interest rate in March or April. (See link)
  • Overnight, US labour market data printed broadly in line with expectations, with a 140k lift in private payrolls in the ADP employment and the JOLTS reports showing job openings nudging down to 8.86m.
  • Today, the local calendar also will see weekly International Investment flow data and a speech by BoJ Board Member Nakagawa in Shimane.
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In post-Tokyo trade, JGB futures are weaker, closing -13 compared to settlement levels, despite US tsys bull-flattening (yields finished flat to 6bps lower) following Fed Chair Powell’s testimony to Congress, where he reiterated the Fed’s view of cutting interest rates "at some point this year" but not until it becomes more confident that inflation will keep falling.

  • Labor and Real Cash Earnings surprise on the upside printing +2.0% y/y and -0.6% y/y respectively versus expectations of +1.2% and -1.5% and revised priors of +0.8% and -2.1%. These numbers are likely to pressure JGBs in the early rounds of the Tokyo session.
  • (MNI) The latest insight from our Tokyo policy team (out late yesterday) suggests NIRP could be ended in March (See link).
  • (Bloomberg) -- Bank of Japan officials are getting more confident over the strength of wage growth, according to people familiar with the matter, a development that supports the view among traders and economists that the BOJ will scrap its negative interest rate in March or April. (See link)
  • Overnight, US labour market data printed broadly in line with expectations, with a 140k lift in private payrolls in the ADP employment and the JOLTS reports showing job openings nudging down to 8.86m.
  • Today, the local calendar also will see weekly International Investment flow data and a speech by BoJ Board Member Nakagawa in Shimane.