Assessing Policy Implications Of The Shooting Of Abe

Afternoon trade in JGBs focused on news that PM Abe, he was hospitalised as a result and is reportedly unconscious and in cardio-respiratory arrest. Futures initially ticked lower in the wake of the news, with participants perhaps looking at the potential knock-on impact of receding Abe influence in the Japanese policymaking sphere. e.g. the potential for expedited changes to defence and monetary policies, although the contract is off of worst levels into the Tokyo bell, -36 after making fresh session lows in the Tokyo afternoon. Cash JGBs are little changed to 3bp cheaper across the curve, with 7s weaker than surrounding lines owing to the move in futures, while 20s provide the weakest point on the curve.

• There wasn’t much in the way of pre-lunch news flow to digest for the space, outside of soft household spending data.
• Note that JPX data, released late on Thursday, revealed continued short covering of the wider net short position held by foreign investors last week, albeit at a slower rate than what was observed in the previous week (similar to what we suggested on the back of the weekly international security flow data).
• Looking ahead, core machine and machine tool orders data, in addition to an address from BoJ Governor Kuroda, headline domestic matters on Monday.