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JGBS: Cash Bonds Richer Beyond the 7Y Despite Better Than Expected Data

JGBS
BulletAPACFixed Income BulletsJapanMarkets

In Tokyo morning trade, JGB futures are stronger, +5 compared to settlement levels, despite slightly better than expected domestic data.

  • Japan's labour earnings and household spending figures were a little bit better than expected, albeit more so in real than nominal terms. The headline cash earnings print rose 2.6% y/y, same as forecast, although the prior month was revised down to a 2.5% gain (initially reported at 2.8%). Real earnings were flat against a -0.1%y/y forecast (prior revised to -0.4%). Real household spending was still negative at -1.3%y/y, but well above market expectations of a -2.5% fall (prior was -1.1%).
  • Cash US tsys are little changed in today’s Asia-Pac session ahead of US Payrolls data. Payroll growth is expected to bounce sharply to 215k in November after October’s strike and weather-related disruption.
  • Analysts are split on whether to call for a 4.1% or 4.2% unemployment rate in November after the 4.145% in October. The FOMC’s dovish shift to a 4.4% forecast for 4Q24 will likely be undershot.
  • Cash JGBs are little changed across benchmarks to the 7-year and 1-3bps richer beyond.
  • The swaps curve has twist-steepened, pivoting at the 20-year, with rates 2bp lower to 2bps higher. Swap spreads are mixed.
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In Tokyo morning trade, JGB futures are stronger, +5 compared to settlement levels, despite slightly better than expected domestic data.

  • Japan's labour earnings and household spending figures were a little bit better than expected, albeit more so in real than nominal terms. The headline cash earnings print rose 2.6% y/y, same as forecast, although the prior month was revised down to a 2.5% gain (initially reported at 2.8%). Real earnings were flat against a -0.1%y/y forecast (prior revised to -0.4%). Real household spending was still negative at -1.3%y/y, but well above market expectations of a -2.5% fall (prior was -1.1%).
  • Cash US tsys are little changed in today’s Asia-Pac session ahead of US Payrolls data. Payroll growth is expected to bounce sharply to 215k in November after October’s strike and weather-related disruption.
  • Analysts are split on whether to call for a 4.1% or 4.2% unemployment rate in November after the 4.145% in October. The FOMC’s dovish shift to a 4.4% forecast for 4Q24 will likely be undershot.
  • Cash JGBs are little changed across benchmarks to the 7-year and 1-3bps richer beyond.
  • The swaps curve has twist-steepened, pivoting at the 20-year, with rates 2bp lower to 2bps higher. Swap spreads are mixed.