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JGBS: Cash Bonds Slightly Richer, BoJ Officials See A Hike This Month

JGBS
BulletAPACFixed Income BulletsJapanMarkets

At the Tokyo lunch break, JGB futures remain stronger, +25 compared to settlement levels, but below overnight closing levels.

  • “BoJ officials think it's likely they'll raise interest rates at their January 24 meeting unless Donald Trump's presidency causes market disruptions. The officials believe Japan's economy and inflation are on track with their projections, supporting their 2% inflation target and a potential rate hike. The officials are also encouraged by signs of wage growth and expect a solid outcome from annual spring wage negotiations, which could support a rate increase.” (per BBG)
  • Cash US tsys are flat to 1bp cheaper, with a flattening bias, in today’s Asia-Pac session after yesterday’s strong post-CPI rally. Weekly Jobless Claims and Retail Sales highlight today’s US calendar.
  • Cash JGBs are flat to 1bp richer across benchmarks out the 30-year and 1.5bps cheaper beyond. The benchmark 20-year yield is 0.7bp lower at 2.014% ahead of today’s supply.
  • Notably, today’s 20-year JGB auction features an outright yield at a cycle high, 10–15bps above last month’s auction.  
  • Swap rates are 1-4bps higher, with swap spreads wider.
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At the Tokyo lunch break, JGB futures remain stronger, +25 compared to settlement levels, but below overnight closing levels.

  • “BoJ officials think it's likely they'll raise interest rates at their January 24 meeting unless Donald Trump's presidency causes market disruptions. The officials believe Japan's economy and inflation are on track with their projections, supporting their 2% inflation target and a potential rate hike. The officials are also encouraged by signs of wage growth and expect a solid outcome from annual spring wage negotiations, which could support a rate increase.” (per BBG)
  • Cash US tsys are flat to 1bp cheaper, with a flattening bias, in today’s Asia-Pac session after yesterday’s strong post-CPI rally. Weekly Jobless Claims and Retail Sales highlight today’s US calendar.
  • Cash JGBs are flat to 1bp richer across benchmarks out the 30-year and 1.5bps cheaper beyond. The benchmark 20-year yield is 0.7bp lower at 2.014% ahead of today’s supply.
  • Notably, today’s 20-year JGB auction features an outright yield at a cycle high, 10–15bps above last month’s auction.  
  • Swap rates are 1-4bps higher, with swap spreads wider.