Selloff in global bonds extended yesterday and sent US yields sharply higher. 10 year yield rose 0.053 to close at 1.843 after hitting at high at 1.870. The strong breakout from a near term range below 1.8 confirmed resumption of the recent rally from 1.336 low made in July. And it's now heading to 1.89 key resistance level. The surge was generally attributed to three factors. Firstly, stronger than expected UK GDP eased concerns over fallout from Brexit. Secondly, BoJ governor Haruhiko Kuroda said that it "would not be strange" for long term yields to rise. Thirdly, markets continue to solidify expectations of December Fed hike. Fed fund futures are pricing in nearly 80% chance for that. Dollar is trading higher against most major currencies except Euro.
A batch of economic data is released from Japan today. National CPI dropped -0.5% yoy in September, unchanged from August's reading and meet expectations. Tokyo CPI dropped -0.4% yoy in October, above September's reading and expectation of -0.5% yoy. Unemployment rate dropped 0.1% to 3.0% in September. Household spending dropped -2.1% yoy in September, better than expectation of -2.7% yoy. BoJ will meet next week and announce policy decision on November 1. Markets generally expect the central bank to stand pat. Also released in Asian session, Australia PPI rose 0.3% qoq, 0.5% yoy in Q3.
Looking ahead, Swiss will release KOF leading indicator in European session. Eurozone will release confidence indicators. Germany will release CPI. US will release Q3 GDP advance and employment cost index.