Futures Bid Overnight, Reaction To North Korean Missile Launch Eyed

The wider gyrations observed in core global FI markets on Monday provided a bid for JGB futures during overnight dealing, with that contract finishing post-Tokyo trade +28, after pulling back from best levels on a late Gilt-driven move.

• Early Tuesday headline flow has been dominated by what seems to have been the launch of a North Korean ballistic missile, which landed in the Pacific Ocean. This missile crossed Japanese airspace, triggering a civilian warning for various areas of Japan, including parts of Tokyo (the first time such a warning has been triggered since ’17). Japanese Chief Cabinet Secretary Matsuno has noted that there are no reports of damage sustained by Japan, while he also noted that the missile appears to have fallen outside of Japan’s EEZ.
• This could drive a bit of a bid for JGBs during the early rounds of Tokyo dealing.
• Tokyo CPI data and 10-Year JGB supply headline the domestic docket on Tuesday.