Richer Ahead Of Data Drop, US Tsy Yields Lower

In post-Tokyo trade, JGB futures are stronger, closing +17 compared to settlement levels, after cash tsy yields finished NY trading, registering declines of 7-12bp across major benchmarks. Investors were assessing the consequences of the bipartisan agreement, which was announced on Saturday, and entails the suspension of the debt limit for the upcoming two years. Getting the deal to pass through a fractious Congress before the June 5 "X" date is the real challenge.

• Attention now shifts towards ADP private employment data (Thu) and Non-Farm Payrolls (Fri) with the current median estimate projecting a gain of +190,000 jobs for May compared to the previous figure of +253,000. Fed enters policy blackout at midnight Friday.
• A weaker yen would put pressure on the Bank of Japan to move more quickly to increase the flexibility of its yield curve control framework, though Governor Kazuo Ueda would be reluctant to make such a move soon and remains determined to stick to ultra-easy policy settings, MNI understands, see this link for more details.
• According to a Bloomberg article, Japan’s biggest life insurers have ramped up their use of longer-dated currency hedges to a record to escape sky-high costs. (link)
• On the data front today, Apr retail sales, IP, consumer confidence and housing starts are all on tap.