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JGBS: Futures Range Bound, JGB Bonds Outperforming Recent US Sell-off

JGBS
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JGB futures have stayed within recent ranges in the first part of Friday trade. JBH5 (March 2025) was last 142.53, +.08 versus settlement levels. Earlier highs were at 142.62. 

  • The Q4 Tankan survey came in mostly better than expected and points to a resilient growth/capex outlook. Inflation expectations were also solid.
  • Still, it wasn't robust enough to shift market expectations around next week's BoJ meeting. Market pricing is only giving close to a 16% chance of a hike next week. We were consistently above 60% in parts of late Nov.
  • The bias in JGB yields has been to edge lower, more so for short tenors, with swap rates behaving in a similar fashion. Japan bonds have outperformed the recent sell-off in US Tsy bond markets.
  • The 10yr JGB yield was last under 1.05%, slightly up from session lows. Yields have been slightly firmer in the 20-40yr tenor space.
  • Next week's main focus will rest on the Thursday's BoJ meeting. 
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JGB futures have stayed within recent ranges in the first part of Friday trade. JBH5 (March 2025) was last 142.53, +.08 versus settlement levels. Earlier highs were at 142.62. 

  • The Q4 Tankan survey came in mostly better than expected and points to a resilient growth/capex outlook. Inflation expectations were also solid.
  • Still, it wasn't robust enough to shift market expectations around next week's BoJ meeting. Market pricing is only giving close to a 16% chance of a hike next week. We were consistently above 60% in parts of late Nov.
  • The bias in JGB yields has been to edge lower, more so for short tenors, with swap rates behaving in a similar fashion. Japan bonds have outperformed the recent sell-off in US Tsy bond markets.
  • The 10yr JGB yield was last under 1.05%, slightly up from session lows. Yields have been slightly firmer in the 20-40yr tenor space.
  • Next week's main focus will rest on the Thursday's BoJ meeting.