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Futures Are Holding The Overnight Gain In Morning Trade, Data Mixed


In Tokyo morning trade, JGB futures are holding the overnight gain, +11 compared to settlement levels.

  • Japan's Q2 capex and company profits data were mixed relative to expectations. On the capex side, the data surprised on the downside. Spending in y/y terms was at 4.5%, nearly half the 8.3% consensus. The prior was 11.0%. Ex software capex spending also disappointed, printing 4.4% y/y, versus 7.5% forecast and 10.0% prior. Profits were better, +11.6% y/y, versus -0.1% forecast and 4.3% prior. Company sales were 5.8% y/y, versus 4.3% forecast and 5.0% prior.
  • Jibun Bank and IHS Markit manufacturing PMI printed unchanged at 49.6 in August. New orders rose versus the prior month to the highest reading since June 2023.
  • The cash JGB curve twist-flattened, pivoting at the 2s, with yields 0.3bp higher to 1.0bp lower. The benchmark 10-year yield is 0.9bp lower at 0.642%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
  • Swaps rates are mostly lower, part from the 2-year, with pricing 0.1bp to 0.6bp lower. Swap spreads are wider.

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