Firmer, Futures Show Above Recent High

JGB futures have shunted higher in recent trade, extending through their early Tokyo high. There hasn’t been much in the way of outright fundamental triggers for such a move, with Finance Minister Suzuki reaffirming the independence of the BoJ (pointing to respect for the Bank’s latest monetary policy decision and highlighting the cost-push nature of the recent move higher in inflation), while he flagged the need to monitor the downside risks that inflation poses to the Japanese economy. This isn’t particularly new news, but the language deployed may have supported the space. Elsewhere, Chief Cabinet Secretary Matsuno has highlighted the need to monitor downside risks to the economy.

• Futures are last +30, while the wider cash JGB space runs little changed to 3bp richer on the day, with 20s providing the firmest point on the curve and 7s outperforming surrounding lines owing to the bid in futures.
• Note that a brief break through the 7 July high for futures may have added a technical element to the bid.
• A quick reminder that national CPI data was virtually in line with expectations, with the headline Y/Y metric moderating at the margin, while the core measures nudged higher. A government official noted that core CPI experienced the biggest one-month rise since Sep ‘08 when the series is adjusted for the impact of sales tax hikes.
• Elsewhere, weekly international security flow data pointed to the continued covering of short JGB positions by foreign investors.