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Futures At Session Highs At Lunch

JGBS

At the Tokyo lunch break, JGB futures are sitting at session highs, +12 compared to settlement levels, after August's PPI printed a touch stronger than expected at +0.3% m/m versus +0.2% forecast and +0.1% prior.

  • Elsewhere, the Reuters Tankan monthly poll of big manufacturers showed the biggest drop since January. Sentiment also softened in the services sector.
  • Beyond the 1-year, the cash JGB curve has bull-flattened, with yields 0.1bp to 1.4bp lower. The benchmark 10-year yield is 0.9bp at 0.702% versus yesterday’s post-YCC tweak high of 0.722%.
  • Swap rates are flat to lower across the curve, with swap spreads generally wider out to the 10-year and narrower beyond.

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