US: Trump Notes Financial Market Disruption If Powell Is Fired

In post-Tokyo trade, JGB futures closed stronger, +12 compared to settlement levels, despite markets reversing the initial risk-off move. With Israel’s aerial attack dominating, the conflict not spreading to include other countries, and oil infrastructure not targeted, the markets adopted a more sanguine view, with risk assets recovering and US tsys selling off. 

• US President Trump has posted on Truth Social, stating that Iran should have signed the deal he told them to sign, while also reiterating that Iran cannot have a nuclear weapon.
• The BoJ is expected to keep its policy rate unchanged at 0.50% today. The key area of interest will be Governor Kazuo Ueda's post-meeting press conference. Investors will closely examine his comments for any signals on the timing and likelihood of future rate hikes. If the BoJ begins to hint at stronger underlying inflationary trends or shows greater optimism about the economy, it could stoke expectations of a rate hike in the autumn.
• The second area of market focus is on the BoJ's JGB purchase program. Market expectations suggest a slower pace of reductions during fiscal year 2026. If the BoJ chooses to maintain the current pace of 400 billion reductions per quarter in FY2026, this would be interpreted as a mildly hawkish move. (See MNI BoJ Preview here)

ACGBs (YM -1.0 & XM -1.5) are little changed after markets reverse initial risk-off. With Israel’s aerial attack dominating, the conflict not spreading to include other countries, and oil infrastructure not targeted, the markets adopted a more sanguine view, with risk assets recovering and US tsys selling off.

• NY Fed's Empire Manufacturing survey unexpectedly saw the headline General Business Conditions index worsen in June, to a 3-month low -16.0 (-6.0 expected) vs -9.2 in April.
• Cash ACGBs are little changed with the AU-US 10-year yield differential at -20bps.
• The bills strip is modestly richer, with pricing flat to +2.
• RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut in July is given an 85% probability, with a cumulative 78bps of easing priced by year-end.
• Today, the local calendar will be empty. The highlight of the week will be May jobs data on Thursday. Bloomberg consensus sees a 20k rise in new jobs, in line with the 3-month average, with the unemployment and participation rates stable at 4.1% and 67.1% respectively.
• The AOFM plans to sell A$300mn of the 4.75% 21 June 2054 bond today, A$900mn of the 2.75% 21 June 2035 bond on Wednesday and A$800mn of the 1.00% 21 December 2030 bond on Friday.

In local morning trade, NZGBs are little changed, with the NZ-US 10-year yield differential 3bps tighter after markets reversed the initial risk-off. With Israel’s aerial attack dominating, the conflict not spreading to include other countries, and oil infrastructure not targeted, the markets adopted a more sanguine view, with risk assets recovering and US tsys selling off.

• US President Trump has posted on Truth Social, stating that Iran should have signed the deal he told them to sign, while also reiterating that Iran cannot have a nuclear weapon.
• NZ food prices rose 0.5% from a month earlier in May.
• Rabobank’s Q2 survey of farmer confidence showed that 44% of farmers expect agricultural economic conditions to improve in the coming 12 months, matching Q1 and the highest since Q2 2017. Key drivers of optimism were rising commodity prices and the outlook for overseas markets. (per BBG)
• REINZ House Price Index falls 0.6% m/m in May, +0.1% y/y.
• Swap rates are unchanged.
• RBNZ dated OIS pricing is little changed across meetings. 4bps of easing is priced for July, with a cumulative 28bps by November 2025.
• On Thursday, the NZ Treasury plans to sell NZ$225mn of the 3.00% Apr-29 bond, NZ$175mn of the 2.75% Apr-37 bond and NZ$50mn of the 2.75% May-51 bond.