[MARKET ANALYSIS] T-note futures paused overnight after recently gaining on Fed Waller's support for keeping rates steady this month

USTs: -0.5 ticks

• Pauses overnight after gaining in the aftermath of Fed Waller's comments, in which he said he would support holding the policy rate steady in September if August inflation data shows continued progress, but would consider a hike if inflation is hot, while he stated they can wait one meeting and that there is little cost to waiting one meeting. Markets now await the key US jobs data, which could provide a further impulse on September rate expectations.

Bunds: -15 ticks

• Pulled back after yesterday's mild rebound and failed to sustain the brief reclaim of the 123.00 level, while participants also look ahead to German Factory Orders and EU Retail Sales data.

JGBs: +48 ticks

• Tracked the recent upside in global peers and with recent reports noting that the BoJ is reportedly favouring a 25bps hike and a flexible future pace, which effectively negates the recent suggestion by Board Member Takata, who had left the door open for a larger move this month.

The structure here is a conditional-hold signal from Waller: steady rates this month if inflation progress continues, openness to a hike only if the data run hot, framed explicitly around the low cost of waiting one meeting. That is a data-dependent straddle rather than forward guidance, and the historical pattern with such two-sided commentary is that the front end re-prices modestly on the remark itself and then hands direction back to the calendar, here the jobs report, which is the stated hinge for the September decision. The three-way split in the note is instructive: USTs consolidating after the Waller bid, Bunds failing to hold a reclaim of a round level ahead of German Factory Orders and EU Retail Sales, and JGBs leading on reported BoJ leanings toward a standard-sized hike with a flexible pace thereafter. The JGB move is the more interesting leg, since reporting that effectively overrides a board member's open door to a larger move follows the established sequence in which sourced reporting, rather than official speeches, tends to set the near-term BoJ pricing. The tells are whether the jobs data validate the waiting frame, and whether Bund and JGB moves prove flow-driven rather than durable once the data clear.