Futures Hold Overnight Losses Despite Labor Earnings & Spending Miss

JGB futures hold overnight losses in early Tokyo trading, -19 compared to settlement levels, after the morning data drop. Importantly, real and nominal labor cash earnings and household spending came in lower than estimates.

• Japan's current-account surplus was at Y1.51tn in June versus Y1.86tn in May. The adjusted current-account surplus was Y2.35tn versus Y2.24tn est. Bank lending rose +2.9% y/y versus +3.1% y/y prior.
• Japanese investors bought the largest amount of Dutch sovereign bonds since 2016 in June, according to the latest balance-of-payments data. Net purchases totalled ¥202bn. Japanese funds bought sovereign debt from the US, France, UK and Italy, while selling German securities. Australia saw a net inflow of Y43bn, the lowest level of net buying since February.
• Cash JGBs are slightly cheaper across the curve with yields flat to 0.9bp higher. The benchmark 10-year yield is 0.5bp higher at 0.635% after yesterday’s BoJ Summary of Opinions' consensus signalled that enhancing the flexibility of YCC would allow the BoJ to continue monetary easing. This was deemed necessary as the inflation target hasn't yet been attained in a sustainable manner.
• The swaps curve bear steepens with rates 0.1bp to 1.3bp higher. Swap spreads are wider across the curve.