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Futures Lower Overnight, Nominal Wage Growth Surges

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JGB futures finished the overnight session 15 ticks below Tokyo settlement levels as the pull of wider core global fixed income markets applied weight to the contract, more than unwinding the late Tokyo session uptick, as the contract went out just above worst levels of post-Tokyo dealing.

  • Succession of BoJ Governor Kuroda continues to dominate headline flow, as well as the thought process of market participants and BoJ watchers alike. Current BoJ Deputy Governor Amamiya remains the front runner in the eyes of most, with the latest domestic press reports pointing to the likelihood that the government outlines its nominations for the position at some point next week (previous reports suggested that move could come as soon as 10 February).
  • Note that today’s headline local data has already crossed, revealing much firmer than expected wage growth (nominal wages recorded the largest Y/Y increase since the 90s), alongside softer than expected household spending. The former will no doubt please the BoJ ahead of the annual shunto wage negotiations, with the Bank looking to foster sustainable and meaningful wage growth as it prolongs the deployment of its ultra-easy policy settings. The wage data may apply pressure to JGBs in early Tokyo trade.
  • 30-Yeear JGB supply provides the focal point of the remainder of the session.
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JGB futures finished the overnight session 15 ticks below Tokyo settlement levels as the pull of wider core global fixed income markets applied weight to the contract, more than unwinding the late Tokyo session uptick, as the contract went out just above worst levels of post-Tokyo dealing.

  • Succession of BoJ Governor Kuroda continues to dominate headline flow, as well as the thought process of market participants and BoJ watchers alike. Current BoJ Deputy Governor Amamiya remains the front runner in the eyes of most, with the latest domestic press reports pointing to the likelihood that the government outlines its nominations for the position at some point next week (previous reports suggested that move could come as soon as 10 February).
  • Note that today’s headline local data has already crossed, revealing much firmer than expected wage growth (nominal wages recorded the largest Y/Y increase since the 90s), alongside softer than expected household spending. The former will no doubt please the BoJ ahead of the annual shunto wage negotiations, with the Bank looking to foster sustainable and meaningful wage growth as it prolongs the deployment of its ultra-easy policy settings. The wage data may apply pressure to JGBs in early Tokyo trade.
  • 30-Yeear JGB supply provides the focal point of the remainder of the session.