Rate cut odds/BoJ gets another reason to hike/Some data and earnings calls

So the economic data softness driven Treasury rally since mid last week after the poor auction driven selloff has seen the odds of a 2nd Fed rate cut by year end rise to 56% up from just 16% as of one week ago. Of course the jobs data both today and Friday will further influence pricing. 

While the Fed is searching for every reason to cut rates (based on the many that keep using the word 'restrictive'), the BoJ is looking for any reason to hike and they got another one overnight with the April wage data. Base pay rose 2.3% y/o/y, reflecting the Shunto negotiations, and up from 1.7% in the two prior months. That is the fastest pace of wage growth in 30 years, yes, since 1994. Unfortunately for Japanese workers though, this is now just keeping up with inflation. JGB yields did fall rather than rise in response and that's most likely due to the sharp Treasury rally seen these past few days and which was followed in Europe. The BoJ meets next week and if no move is made with rates, I expect it in July. The yen is weaker too after the sharp two day rally Monday and Tuesday. 

Base Pay Growth in Japan y/o/y

Out too today in Asia were some more PMI's. The private sector Caixin services index for China rose to 54 from 52.5. The service side of their economy continues to do much better than manufacturing and Caixin said "Business activity and total new orders both grew for the 17th month in a row, increasing at the fastest pace since July and May last year, respectively. Notably, growth in total new orders recorded its fourth consecutive month of acceleration, reflecting a strong recovery in demand...Employment expanded following three months of contraction."