JGBS: Futures Give Up Overnight Gains

The ESU5 overnight range was 6259.75 - 6315.00, Asia is currently trading around 6305. The September contract lifted off the 6250 area and has closed back above 6300. This morning has seen US futures open a little lower, ESU5 -0.10%, NQU5 -0.10%. US Stocks have shrugged off the latest tariff threats and instead focused on the fact Trump said he is still open to more trade negotiations.

• Wei Li(BlackRock) on LinkedIn: “ONE MYSTERY that the team has been debating all week – who will bear the cost of higher tariffs? Is it: Consumers? Yet to show up meaningfully, all eyes on CPI tonight; Corporates? But it is not consistent with profit margin making new highs, all eyes on earnings kicking off this week; Foreign suppliers? I’ve only seen some inconclusive evidence at best.”
• Lance Roberts on X: “Housing, which makes up over 40% of the CPI index, continues to weaken. Both the number of home sales and prices continue to decline." See Graph Below.
• Mark Zandi on X: ”I sent off a yellow flare on the housing market in a post a couple of weeks ago, but I now think a red flare is more appropriate. Home sales, homebuilding, and even house prices are set to slump unless mortgage rates decline materially from their current near 7% soon. That, however, seems unlikely.”
• (Bloomberg) - “Wall Street banks are poised to post gains largely from record trading in the aftermath of Trump’s “Liberation Day” shock. Analysts expect Goldman to lead in equities and JPMorgan in FICC, with investors watching for guidance on how lenders plan to ride regulatory tailwinds”
• Short-term this is starting to look a little overdone but the market clearly disagrees for now and sees the potential for a melt-up. First support is back towards the 6100 area.

Fig 1: National Month-Over-Month HPA

Source: MNI/@lanceRoberts

The start of the week saw positive inflow momentum into South Korea and Thailand, but mostly softer trends elsewhere. South Korea's Kospi continues to rally, testing through 3200, amid bullish sell-side optimism (on reform hopes and earnings). This is likely aiding a return of offshore inflows, although year to date flows remain firmly in negative territory, so there is still scope for catch up. 

• Taiwan saw net outflows yesterday, trimming net inflows seen in the past 5 trading sessions. At the end of last week, India saw sharp outflows, the largest since the end of May.
• Offshore investors returned to net selling Indonesian stocks yesterday, a consistent theme since the start of July.
• The rebound in the SET Thailand index (which gained a further +2% yesterday) is drawing in flows, with month to date offshore buying now back into positive territory. 

Table 1: Asian Markets Net Equity Flows

Source: Bloomberg Finance L.P./MNI 

The Australian Office of Financial Management (AOFM) will today sell A$300mn of the 4.75% 21 June 2054 Treasury Bond. The line was last sold on 17 June 2025 for the same amount. Several key factors will likely shape investor demand at today’s auction: 

• The bond’s outright yield is 5-10bps higher from the previous auction, though it remains around 10bps below the peak reached in May.
• Sentiment toward longer-dated global bonds remains cautious, which may temper demand.
• However, the 10s/30s yield curve is around the same level as the last auction, sitting at its steepest level since late 2021 — a potentially supportive technical factor.
• Overall, pricing is expected to remain firm, underpinned by a stable yield profile and a more attractive curve backdrop.
• Results are due at 0200 BST / 1100 AEST.