Futures Lead The Bid In The Afternoon

The previously outlined softer than expected Chinese economic activity data has helped support JGB futures (and wider core global FI markets) during the Tokyo afternoon after a fairly limited morning session. That leaves JGB futures +9 as we move towards the bell, while cash JGBs run flat to 1.5bp richer across the curve, with 7s leading on the bid, which was quite futures-centric.

• Preliminary Japanese Q2 GDP data provided a downside surprise, rising by 0.5% Q/Q & 2.2% in annualised terms vs. BBG median exp. Of +0.7% & +2.6%, respectively, although Q1 data was revised higher, with the previously outlined 0.1% Q/Q fall adjusted to 0.0%. Misses in private consumption and inventories seemingly provided the most notable contributions to the headline miss, with net exports flat, in line with expectations, and business spending beating expectations
• Elsewhere, following the previously announced meeting re: inflation, Japanese Prime Minister Kishida noted that he has asked the trade minister to come up with plans to curb fuel prices, in addition to formulating extra steps when it comes to rising energy and electricity bills. Kishida also instructed the agriculture minister to make no changes to imported wheat prices from October. Further measures are set to be announced in September.
• Looking ahead, 5-Year JGB supply headlines Tuesday’s domestic docket.