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JGB futures are off earlier highs. After drifting up to 137.40 after the open, we are back around 137.32, -.04, in latest dealings. This keeps us above Tuesday lows, (137.22), but the bias appears to be skewed lower at this stage. Some negative spill over is likely from weaker US 10yr Tsy futures, although aggregate moves are modest at this stage. (TY futures adown -02+). 

•  Cash JGB yields have opened up little changed, the 10yr remains close to 1.63%. The JGB 2/30 curve sits a touch flatter versus recent levels, last around +233bps.
• In the swap space, we are a touch yield in yield terms. 

SEEK reported that July advertised salaries rose 0.2% m/m and 3.3% y/y, the slowest annual rate since July 2021 and down from June’s 3.5% but still above inflation. It doesn’t appear to have been impacted by the July 1 3.5% increase in the minimum wage with 3-month momentum moderating. SEEK salaries have been trending lower since they peaked at 4.9% in September 2023 and signal that wages remain contained as lower inflation expectations and less tight labour market conditions feed into wage demands. The WPI was stable at 3.4% y/y in Q2 and the RBA is projecting it to ease to 3.3% in Q4 and then be close to 3% over the rest of its forecast horizon. 

Australia SEEK advertised salary index %

The S&P(ESU5) overnight range was 6435.00 - 6487.50 closing +0.41%, Asia is currently trading around 6484, +0.03. The ESU5 contract once again found buyers on the dip as the market concentrates selectively on the positives of a potentially more dovish Fed. The S&P remains in a bullish uptrend and dips will continue to be bought while above 6200/6300, as the market ignores what is normally a very poor seasonal period.

• (Bloomberg Economics) - Trump Could Give Lockheed the Intel Treatment: The Trump administration is weighing an unprecedented move: taking an equity stake in defense companies — specifically Lockheed Martin — to boost munitions production. Such direct government intervention in a publicly traded defense company would be unprecedented.
• Lance Roberts on X: “Consolidated and discretionary investors have not ramped up exposure as dramatically as systematic traders during the recent rally. However, I suspect we will see the laggards dragged back into the market before long.” 
• RenMac on X: “Consumers see increasing slack in the jobs market. The Labor Differential continues to soften, falling to a fresh low of 9.7 in August. In particular, we saw a notable jump in those saying “jobs hard to get.” See Fig.1 Below
• (Bloomberg) - “Traders are looking ahead to Nvidia’s earnings and a key inflation report later this week for further insight on the artificial intelligence euphoria that has powered US stocks to records on the potential profit growth, and the path of interest-rate cuts.”

Fig 1: US Labor Market Differential

Source: MNI - Market News/Renaissance Macro Research