Cash Bond Bull-Flattener, Rtrs Poll Swings Further To No Change From BoJ In July

JGB futures are sitting flat compared to settlement levels after giving up gains initiated by today’s National CPI data.

• Outside of the previously outlined National CPI, there hasn't been much in the way of domestic data drivers to flag.
• (Straits Times) “Japan's government cut 2024's growth forecast on July 19 as consumption took a hit from rising import costs due to a weak yen."
• A Reuters poll indicates that 76% of economists (up from 61% in the previous poll) expect the BoJ to hold interest rates at the July meeting. Additionally, 59% believe the BoJ will taper monthly bond purchases to around 5 trillion yen as a first step. Economists are split on the timing of a rate hike, with 43% expecting it in October, 30% in September, and 24% in July.
• The cash JGB curve has bull-flattened, with yields flat to 3bps lower across benchmarks. The benchmark 10-year yield is 0.5bp lower at 1.037% versus the cycle high of 1.108%.
• Swap rates are flat to 2bps lower out to the 30-year and 1bp higher beyond. Swap spreads are mostly tighter.
• On Monday, the local calendar will see Tokyo Condominiums for Sale data alongside an Enhanced Liquidity Auction covering OTR 1-5-year JGBs.