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Overnight Losses In Futures Pared Following Domestic Data Drop


In Tokyo morning trade, JGB futures are weaker, -10 compared to settlement levels, but stronger than overnight closing levels following the domestic data drop.

  • As previously outlined, Oct jobless rate ticked-down to 2.5%, versus a 2.6% forecast and 2.6% prior outcome. It is still above the earlier 2023 low of 2.4%, but comfortably off highs of 2.8% (seen in March). The job-to-applicant ratio ticked-up to 1.30 from 1.29 prior (1.29 was also the market consensus). The detail on the unemployment rate doesn't look as strong, with the number of employed persons dropping 70k in the month. The number of unemployed fell by 20k in the month.
  • Q3 capital spending was right on consensus estimates at 3.4%y/y but slowed versus Q2's 4.5% pace. Q3 was the softest pace since the start of 2022 in y/y terms. Ex software spending was below expectations, +1.7% y/y (+3.4% forecast and 4.4% prior). Momentum is now back to 2021 levels.
  • The cash JGB curve has bear-steepened, with yields flat to 2.0bps higher. The benchmark 10-year yield is 2.3bps higher at 0.695% versus the cycle high of 0.97% set in late October and the BOJ's 1% YCC reference rate. The 2-year JGB sits unchanged at 0.028% after yesterday’s poorly received supply.
  • Swap rates are little changed out to the 30-year, with the 40-year rate 2bps higher. Swap spreads are tighter out to the 30-year.

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