US2s10s steepen| PCE numbers largely in line| BoC and ECB ahead|

Yields on 10JGBs continued the march higher towards 1.10% as Services Sector inflation came in higher than expectations. The next BoJ meeting is scheduled for 13 - 14 June. BoJ intervened to the tune of $ 62.20 bn over two days of intervention. JPY weakened past the 160 handle when BoJ first intervened and dropped to lows of 154.50. 

We have the Bank of Canada and the ECB Monetary policy meeting where expectations are for 25 bps of rate cuts. 

 The implied Fed Fund Futures priced in 29 bps of rate cuts for 2024 from 32 bps last week. The Fed Fund Futures are pricing in first complete rate cut by the November policy.  The PCE release was on expected lines. Prices of Energy and Non Durable goods rose at an uncomfortable mom momentum while prices of durable goods showed mom contraction. The Services component of the PCE release showed mom price rise of 0.27% which was lower than the average 0.37% mom pace over the last 6 months. The Market reaction to the PCE release was positive. 

The US2s10s steepened 10 bps over the week. I had expected the USD pull back towards the 105 handle, we got a spike higher towards 105.18 levels and a subsequent fall to close the week at 104.6625. I continue to be better seller of the USD. While the data over the last week showed resilience, with GDP up 1.3% up on expected lines, Jobless claims meandering around the current levels, we did not get any cause to push the USD strength further. 

This week is again a super charged week for data releases with Job numbers ( JOLTS / ADP / NFP) and PMI data on the docket. Happy Trading !!