0551 GMT - German Bund yields look set to open higher after the sharp U.S.-led correction over quarter-end, Commerzbank's Hauke Siemssen says in a note. Flash estimate eurozone HICP data--with the headline print expected to decelerate--argues for a stabilisation just below 2.9% for the 10-year Bund yield, the rates strategist says. "Bunds are under pressure and 10-year yields look set to break out of the recently established range today, opening just below 2.9%." The U.S.-led selloff will take its toll on Bunds this morning, he says. In supply, Germany will auction 3.5 billion euros in November 2032 Bunds. (emese.bartha@wsj.com)
0539 GMT - U.S. two- and 10-year Treasury yields hit one-week highs of 4.181% and 4.473%, respectively in Asian trade before coming off peaks. The rise in yields points to a solid U.S. economy coupled with inflationary pressure, while Middle East peace talks still see back-and-forth steps. President Trump has weighed a return to all-out war with Iran but has decided to stick with diplomatic talks for now, according to U.S. officials familiar with the discussion. On the data front, June employment data on Thursday are awaited to confirm continued strength of the labor market, even as some cooling is expected. Meanwhile, oil prices are edging up. The two-year Treasury yield is up 3.7 basis points at 4.175%, while the 10-year is up 4.3 basis points at 4.464%, according to Tradeweb. (emese.bartha@wsj.com)
0531 GMT - The path of least resistance for the dollar/yen pair remains higher, says Carol Kong, currency strategist a the Commonwealth Bank. Despite the pair trading near multi-decade highs, another round of FX intervention doesn't appear imminent, she adds. The latest warnings from Japanese officials have been noticeably less forceful than the rhetoric seen ahead of the intervention in late April, Kong says. That said, Thursday's U.S. payrolls report could provide the next major catalyst. A stronger-than-expected result could prompt markets to further reprice the outlook for U.S. interest rates, potentially pushing dollar/yen toward the 165 level and testing the Ministry of Finance's resolve to defend the currency, Kong says. (james.glynn@wsj.com; Twitter @JamesGlynnWSJ)
0529 GMT - Singapore's flattish residential property price trend is likely to bode well for local developers, as it is expected to keep policy risk at a manageable level, says Citi analyst Brandon Lee in a note. The city-state's private property prices rose 0.5% in 2Q on quarter, slowing from 1Q's 0.9% gain, he notes. While slower growth should reduce the risk of the city-state implementing policy changes, softer sales in certain regions and resale prices of Singapore public housing could cap prices for coming mass-market residential launches, the analyst says. These launches make up around 62% of the 2026 pipeline, he notes. Citi retains City Developments and UOL as its top sector picks. (megan.cheah@wsj.com)
0523 GMT - Australian house prices continued to decline in June, and aren't likely to bottom out until early next year, says Abhijit Surya, senior economist at Capital Economics. Recent housing tax changes have yet to have a significant impact on house prices, with stretched affordability the main driver behind the continuing downturn, he says. The two-speed housing cycle remains alive and well, with the decline in aggregate prices driven almost entirely by Sydney and Melbourne, he notes. But while house prices in midsize capital cities did eke out moderate gains, they too have lost substantial momentum since the start of the year, Surya adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)
0520 GMT - India's manufacturing PMI eased to 54.2 in June from 55.0 in May, according to the purchasing managers survey compiled by S&P Global and HSBC. Growth of new orders and output were among the weakest in four years, while international sales rose at the softest pace since March 2023, the data show. "The moderation suggests demand has cooled slightly after the earlier surge linked to the Middle East conflict," says Pranjul Bhandari, chief India economist at HSBC. Fierce market competition is weighing on client appetite, some firms reported, making goods producers more reluctant to increase prices. "Both the input and output price indices declined, pointing to softer inflation pressures as geopolitical disruptions begin receding," Bhandari says. (kimberley.kao@wsj.com)
0518 GMT - The immediate outlook for the dollar-yen pair is for its grind higher to continue, with currently nothing to detract from attractiveness of the short-yen carry trade, even after adjusting for volatility, says Ray Attrill, head of FX strategy at National Australia Bank. But it will be a grind, given the ever-present threat of foreign exchange intervention, he adds. That said, given the "zero bang for the big bucks" the Ministry of Finance and Bank of Japan got with intervention in April, it is understandable that Japanese officials would be hesitant to run a repeat exercise for the same zero return, Attrill adds. Not that they might not feel obligated to try sooner rather than later, so as not to be accused of crying wolf, he adds. (james.glynn@wsj.com; X @JamesGlynnWSJ)
0515 GMT - Valuation in the long end of the Norwegian government bond yield curve appears attractive, which is further supported by easing supply pressure, SEB's Marthe Eide and Erica Dalsto say in a note. Norges Bank will offer 3 billion kroner in August 2030- and June 2036-dated bonds on Wednesday in Norway's final bond auction before the summer break. The auction will bring year-to-date bond issuance to 73 billion kroner, the Norway strategists say. They expect Norges Bank to aim for the upper end of the 2026 bond supply estimate of between 100 billion kroner and 110 billion kroner. (emese.bartha@wsj.com)
0508 GMT - Job creation in the U.S. is expected to have been robust in June, likely leaving inflation to take the drivers' seat in shaping the Federal Reserve's policy path, Russell Investments' BeiChen Lin says in a note. "If the labor market continues to remain solid, inflation will likely prove to be the more important factor in dictating the Fed's next move," the senior investment strategist says. With the recent uptick in M&A, IPO and debt issuance, a key point to watch would be whether there is an acceleration in financial services job creation, he adds. Analysts in a Wall Street Journal poll forecast an addition of 115,000 jobs in June. The data are due for release Thursday. (emese.bartha@wsj.com)
0456 GMT - The most striking aspect of the yen's decline over the past few weeks is how orderly the price action has been, says Sean Callow, senior FX analyst at InTouch Capital Markets. The dollar-yen pair has ground gently higher, and not shown the excessive volatility that Japanese authorities like to point to in order to justify intervention, he adds. The pullback in oil prices should be helping the yen in the background, but the main story is still interest rates, Callow says. Solid U.S. data has reinforced pricing for the Fed to raise rates this year, and while the BOJ acted in June, 1% is not an attractive yield for a currency already around 40-year lows versus the dollar, Callow says. (james.glynn@wsj.com; X @JamesGlynnWSJ)
0440 GMT - Japanese companies' capital expenditure plans shown in the Bank of Japan tankan survey expanded in line with typical historical trends despite lingering Middle East uncertainties, says Daiwa Securities economist Yutaro Suzuki. Investment appetite remains highly resilient, driven by robust corporate demand to maintain aging facilities and automate operations amid an acute domestic labor shortage, he says. "While private consumption remains sluggish, capital expenditure will likely serve as the main engine for the Japanese economy," Suzuki adds. Large firms plan to increase capital expenditure by 11.5% this business year, the tankan shows. (megumi.fujikawa@wsj.com)
0438 GMT - Australia's building approvals data for May show that new home building approvals fell for a third month in a row. New home building approvals declined by 1.1% over the month, driven by a 7.3% drop in apartment approvals. The federal government's ambitious target for housing supply is being increasingly frustrated. "We're moving even further away from our homebuilding targets," says Master Builders Australia Chief Economist Shane Garrett. (james.glynn@wsj.com; X @JamesGlynnWSJ)