JGBS: Futures Stronger Overnight Despite Weakness In US Tsys

In post-Tokyo trade, JGB futures closed slightly higher, +6, compared to settlement levels, after US tsys finished moderately richer across benchmarks, with the markets awaiting Wednesday's non-government-produced economic data: ADP employment, S&P Global US Services/Composite PMI, and ISM Services.

• MNI BoJ Review-Oct 2025: Focus On Dec Vs Jan Hike Risks: The BoJ held rates steady, as expected, at the end Oct policy meeting. Focus remains on hike risks at the Dec or Jan meetings, with no clear consensus on when the central bank will tighten rates further. Our bias rests with a Jan move, as the central bank seeks more information, particularly on wages, before deciding to act again. Still, a Dec move can't be ruled out. The Q4 Tankan report (out a few days before the Dec meeting) will be closely watched. Market pricing doesn't have a hike priced in until further into 2026.
• MNI POLICY: Ueda Dec 1 Speech Crucial For BOJ Hike Timing. It will be crucial for determining the probability of a rate hike at the Dec 18-19 policy-setting meeting, with a bullish economic and price assessment indicating that Bank executives see a chance of reducing the degree of easy policy at the year's final meeting, MNI understands.
• Today, the local calendar will see BOJ Minutes (Sep MPM) and Monetary base data alongside 10-year supply.

• RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
• RES 2: 96.780 - High Jun 26 (cont)
• RES 1: 96.700 - High Sep 12  
• PRICE: 96.360 @ 16:08 GMT Nov 4
• SUP 1: 96.280 - Low May 15 (cont.)  
• SUP 2: 95.900 - Low Jan 14 (cont.)
• SUP 3: 95.760 - Low 14 Nov ‘24

Having bounced well on the back of the mild US CPI print, Aussie 3-yr futures reversed course Wednesday on strong domestic inflation data containing RBA cut pricing through 2026. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 96.280 as the next major support.

ACGBs (YM +3.5 & XM +2.5) are stronger after cash US tsys finished with modest gains ahead of today’s non-government produced economic data: ADP employment, S&P Global US Services/Composite PMI and ISM Services, as well as the US Tsy Quarterly Refunding announcement.

• MNI RBA WATCH: Bullock Strikes Cautious Tone Following Pause. The Reserve Bank of Australia may not need to ease as much as its peers, Governor Michele Bullock said on Tuesday after the Board unanimously decided to hold the cash rate at 3.6%.
• Bullock said the economy had probably retained more demand than previously expected, which continued to drive inflation, particularly in market services and new-dwelling costs. Monetary policy remains tight despite mixed signals on financial conditions, she reiterated.
• Cash ACGBs are 3-4bps richer with the AU-US 10-year yield differential at +24bps.
• The bills strip has bull-flattened across contracts, with pricing +1 to +4.
• RBA-dated OIS pricing is showing a 25bp rate cut in December at a 12% probability, with a cumulative 10bps of easing priced by February 2026.
• The AOFM plans to sell A$1200mn of the 4.25% 21 March 2036 bond today and A$800mn of the 3.00% 21 November 2033 bond on Friday.
• Today, the local calendar will see S&P Global Composite & Services PMIs.