Cash Cheaper On Catch Up, Futures Hold Losses

Cash JGBs are flat to 2bp cheaper in early Tokyo dealing, with a light steepening impulse observed, excluding 10s, which are capped by the upper limit of the BoJ’s YCC tolerance band. Futures operate around late overnight session levels -16. The impetus from Monday’s core global FI trade has outweighed any input from a softer than expected round of monthly domestic retail sales data.

• Elsewhere, we have seen Finance Minister Suzuki flag a defence spending package that equates to ~2% of Japanese GDP, although specifics surrounding the spending package are still “under consideration.” This hasn’t moved the market, with the size of the spending within expectations generated by source reports released via local press outlets.
• In terms of corporate issuance, Credit Agricole will be coming to market with a multi-tranche samurai bond offering.