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JGBS: Cash Bond Yields Nudge Higher After Today’s Mixed Local Data Drop

JGBS
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At the Tokyo lunch break, JGB futures are stronger, +8 compared to the settlement levels, after dealing in a narrow range for most of the session.

  • The core gauges of Tokyo’s December CPI inflation undershot the consensus forecast, but the readings remain consistent with the Bank of Japan’s assessment that inflation is securing its 2% target. Core inflation (excluding fresh food) tracked a rise in utility prices after the government rolled back energy subsidies. Service-price inflation — the BOJ’s main focus — picked up, with firms having passed on higher wage costs at the October start of the fiscal second half, as well as higher import prices for energy and non-fresh food. (per BBG Economics)
  • Japan’s Ministry of Finance plans to increase government bond issuance to institutional investors by more than ¥1 trillion ($6.3 billion) in the fiscal year starting April 1, centred on shorter debt.
  • Cash US tsys are ~1bp richer in today’s Asia-Pac session. 
  • Cash JGBs are mostly cheaper across benchmarks, with yields 0.5bps lower (3-year) to 2.6bps higher (30-year). The benchmark 10-year yield is 1bp higher at 1.109% versus the cycle high of 1.113%.
  • The swaps curve has twist-steepened, pivoting at the 20-year zone, with rates 1.5bps lower to 3bps higher.
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At the Tokyo lunch break, JGB futures are stronger, +8 compared to the settlement levels, after dealing in a narrow range for most of the session.

  • The core gauges of Tokyo’s December CPI inflation undershot the consensus forecast, but the readings remain consistent with the Bank of Japan’s assessment that inflation is securing its 2% target. Core inflation (excluding fresh food) tracked a rise in utility prices after the government rolled back energy subsidies. Service-price inflation — the BOJ’s main focus — picked up, with firms having passed on higher wage costs at the October start of the fiscal second half, as well as higher import prices for energy and non-fresh food. (per BBG Economics)
  • Japan’s Ministry of Finance plans to increase government bond issuance to institutional investors by more than ¥1 trillion ($6.3 billion) in the fiscal year starting April 1, centred on shorter debt.
  • Cash US tsys are ~1bp richer in today’s Asia-Pac session. 
  • Cash JGBs are mostly cheaper across benchmarks, with yields 0.5bps lower (3-year) to 2.6bps higher (30-year). The benchmark 10-year yield is 1bp higher at 1.109% versus the cycle high of 1.113%.
  • The swaps curve has twist-steepened, pivoting at the 20-year zone, with rates 1.5bps lower to 3bps higher.