• Meanwhile in markets, the yen and Japanese government bonds are taking it on the chin this morning. It’s not a full-blown ‘sell Japan’ rout just yet because the Nikkei is still up a bit for the day;

• USDJPY rose to 162.40 this morning, the highest level since 1986. Japan’s Finance Minister, Satsuki Katayama, threatened with intervention this morning, but to no avail. Journos at Bloomberg are nit-picking over the exact nature of her remarks. Apparently, the remarks weren’t that hawkish enough as it took prodding by a journalist for Katayama to utter the about-to-intervene-line that is “taking bold action”;

• Long end JGB yields are up sharply this morning, with the 10y up 5bps and the 30y 10bps. At 2.69 and 3.95, respectively, we’ve seen higher levels in mid-May (2.79 for the 10y and 4.20 for the 30y). Japanese equities are still benefitting from the weaker yen, with the Nikkei up 1.6%. Meanwhile, US equity futures are up less than half a percent at pixel time;

• Not helping the yen and JGBs is the ongoing Japan-China spat. On Monday, Beijing announced new rare earth export controls targeting Japan. According to the wires, the number of Japanese firms being targeted by the Chinese has doubled to no less than 80. The casus belli for Beijing is, of course, Tokyo’s support for Taiwan;

• Brent crude oil futures are rock-steady this morning, trading around $72 a barrel or thereabout. The tit-for-tat choreographed strikes between the US and Iran have ended, thus giving little reason for punters to push up crude prices. Technical talks between the US and Iran are to resume in Doha today if President Trump is to be believed. But according to Al Jazeera, Tehran is still denying talks will take place at all today. Furthermore, Iran seems to be attempting to levy tolls on Hormuz transit;

• US Treasury yields are rock-steady this morning. Meaning that 10y and 30y yields are trading at the lowest level in a month or two. Fed rate pricing is equally static with about 40bps in hikes priced in. ESTRs haven’t budged either, though I must say I am surprised that the ECB-dated ESTR for the July Governing Council meeting still prices in about 3bps of hikes. Really, the ECB will hold, hold, hold this month;

• In Eurozone money markets, my eyes are firmly fixed on Euribor 6-month settlements. Settlements this month have been on average 26.7bps above 6-month OIS. While that’s more or less in line with my model, I do finally detect an uptick on ECB MRO/LTRO recourse. Put differently, we may have arrived at levels that will lead to increased bank borrowing from the Eurosystem. That would mean that our central bank overlords on the open market desks of the Eurosystem finally have something to do after years of low and steady MRO/LTRO auctions;

• Looking ahead, there are several worthwhile economic reports on the calendar today. US job openings are expected to have declined notably to 7.2k in May from 7.6k in April. But that doesn’t take away from the fact that the US labor market is doing reasonably well, with solid payrolls growth this year (if the data is to be believed). We also get French, German, and Italian preliminary CPI figures for May. Plus a host of ECB-speakers as the ECB’s annual Sintra forum kicks of in earnest.

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