Futures Softer All Day, Curve Steepens On Domestic & Offshore PPI

JGB futures struggled in lieu of firmer than expected domestic PPI data and adjustments to Friday’s U.S. PPI reading, leaving the contract -26 into the bell, a little above Tokyo morning lows, while cash JGBS sit little changed to 3bp cheaper as the curve bear steepens.

• In weekend news, BoJ’s Takata told the Nikkei that it is not the time to end YCC, as he indicated the need for continued ultra-loose policy settings i.e. reiterating the central line of the BoJ (albeit with some reservations re: the side effects of prolonged easing).
• Elsewhere, the weekend saw Japanese PM Kishida echo what we heard from Finance Minister Suzuki, as he noted that the country won’t rely on bond supply to finance the increase in defence spending, with subsequent newswire headlines pointing to the potential for corporate, income and tobacco tax tweaks to fund the increased spending.
• We also saw reports flagging that Japan’s largest industrial union will be pushing for a ~6% total pay hike in the upcoming Spring wage negotiations.
• Looking ahead. Tuesday’s local docket includes a liquidity enhancement auction for off-the-run 5- to 15.5-Year JGBs.