The yen remains under pressure, falling to fresh multi-decade lows against the US dollar. Outside of the yen, G10 currencies generally firmer, with the NZD outperforming. Treasury yields are marginally higher

Global equities extended recent gains, with the S&P 500 up almost 1% in afternoon trading and on track for its strongest quarterly performance since 2020, having gained nearly 14%. The Nasdaq has risen close to 20% over the quarter. Oil was little changed near US$73 per barrel ahead of US-Iran talks in Qatar aimed at formally ending the conflict. Treasury yields rose, while the US dollar was mixed, with Australasian currencies outperforming within the G10 while the yen remained under pressure.

US consumer confidence rose slightly in June, helped by lower gasoline prices, though labour market details softened. The present conditions index declined, while the expectations measure - more closely tied to spending -rebounded to a six-month high. The share saying jobs are hard to get rose to a five-year high, pushing the jobs plentiful less jobs-hard-to-get differential to its lowest since early 2021.

US job openings were little changed in May, with available positions edging up to 7.6 million, slightly above consensus expectations. The report suggests labour demand remains stable, with vacancies and unemployed workers broadly balanced at a one-to-one ratio. Meanwhile, the quits rate was unchanged at 1.9%.

The JOLTS report supported a modest rise in Treasury yields across the curve, despite anticipated quarter-end rebalancing demand. The 10-year yield rose 3bp to 4.41%. German Bunds were little changed, shrugging off slightly softer-than-expected CPI data.

USD/JPY pushed above 162.50 to fresh multi-decade highs, increasing the risk of stronger verbal warnings or outright intervention from Japanese authorities. Japanese finance minister Katayama refrained from commenting on a specific level but said policymakers “will respond to FX appropriately at any time”. The government spent a record 12 trillion yen intervening to support the currency in April and May. Data released yesterday revealed the government didn’t intervene over the past month despite some large intraday moves during the period.

Outside of the yen, G10 currencies were firmer against the US dollar in offshore trade. The gains for European currencies were not large, but the NZD and AUD have advanced close to 0.5% from the local close. NZD/USD pushed up towards 0.5690. The NZD is firmer on the main crosses except for NZD/AUD.

June PMI data suggest China’s economy remains in a slow-growth regime, with both manufacturing and non-manufacturing activity expanding but only marginally. Although both PMIs edged higher, they remain barely above the expansion threshold. The data also highlight the economy’s persistent split with exports continuing to support activity, while domestic demand remains lacklustre.

Curve flattening was the dominant theme in NZ fixed income during yesterday’s local session. Two-year swap rates closed 1bp higher at 3.33%, while 10-year rates outperformed, falling 4bp to 4.00%. As a result, the 2y/10y curve traded to a fresh cycle low of +67bp. There was limited reaction to the ANZ business survey, which showed activity expectations rising to 36.9 in June, while inflation expectations eased to 3.36%. Pricing intentions also softened, with a net 50.7% of firms expecting to raise prices, down from 56.7%.

There is no domestic data scheduled today. Regionally, focus will be on Japan’s Tankan survey and China’s private-sector RatingDog manufacturing PMI. Euro area preliminary June CPI data are expected to show a modest pullback from the previous month. In the US, ADP private payrolls are due ahead of tomorrow night’s official labour-market data. Central bank commentary will also be in focus, with the ECB’s Lagarde, the Fed’s Warsh and the BOE’s Bailey appearing on a panel at the Sintra Forum.

Stuart Ritson is the senior Interest Rates Strategist at BNZ Markets.