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EGB Supply For W/C June 20, 2022 (1/2)

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Outlook Remains Bullish

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W/C 20 June, 2022

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Curve Twist Steepens As Futures Lead The Bid

JGBS

JGB futures regained some poise after their early blip lower (no headlines apparent on the move lower, JPY crosses went bid and core FI weakened), last dealing +39 on the day, although the overnight session high has capped gains in Tokyo.

  • 7s lead the bid on the wider cash JGB curve owing to the rally in futures, with the major JGB benchmarks running little changed to ~3bp richer out to 20s. Beyond that point there has been some modest cheapening, in the region of 0.5-1.5bp, with market dislocation matters and speculation surrounding the BoJ’s policy settings at the fore there.
  • Local headline flow has been fairly limited, with Japan’s Deputy Chief Cab Sec. Kihara noting that policymakers must be cautious of the economic risk of rising prices. This comes after the major CPI readings held steady in the month of May, matching expectations, while the services PPI print rose by 0.1ppt (in Y/Y terms) in the same month.
  • Comments from BoJ Deputy Governor Amamiya are due later today.
  • The summary of opinions frommt he Bank’s most recent monetary policy meeting will provide interest in Monday.
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JGB futures regained some poise after their early blip lower (no headlines apparent on the move lower, JPY crosses went bid and core FI weakened), last dealing +39 on the day, although the overnight session high has capped gains in Tokyo.

  • 7s lead the bid on the wider cash JGB curve owing to the rally in futures, with the major JGB benchmarks running little changed to ~3bp richer out to 20s. Beyond that point there has been some modest cheapening, in the region of 0.5-1.5bp, with market dislocation matters and speculation surrounding the BoJ’s policy settings at the fore there.
  • Local headline flow has been fairly limited, with Japan’s Deputy Chief Cab Sec. Kihara noting that policymakers must be cautious of the economic risk of rising prices. This comes after the major CPI readings held steady in the month of May, matching expectations, while the services PPI print rose by 0.1ppt (in Y/Y terms) in the same month.
  • Comments from BoJ Deputy Governor Amamiya are due later today.
  • The summary of opinions frommt he Bank’s most recent monetary policy meeting will provide interest in Monday.