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JGBS: Cash Bonds Cheaper, PPI Beats, 5Y Supply Due

JGBS
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In Tokyo morning trade, JGB futures remain weaker, -15 compared to settlement levels.

  • Japan's September PPI came in above market expectations. In m/m terms we were flat, against a -0.3% forecast, (prior was -0.2%). The y/y outcome rose to 2.8%, against a 2.6% Aug gain and consensus expectation of 2.3%.
  • Japan's weekly investment flows showed a pick-up in offshore purchases of local bonds for the second straight week. Last week the new Japan government cautioned against further BoJ rate rises in the near term.
  • In terms of Japan's outbound flows, we saw a return to offshore purchases of overseas debt. This marks 3 out of the last 4 weeks we have seen positive outflows. Still, given the sell-off in US fixed income since last week's US NFP report, such trends may be more muted for this week.
  • Cash US tsys are slightly richer across benchmarks in today’s Asia-Pac session after yesterday’s heavy session.
  • Cash JGBs are cheaper across benchmarks, with yields flat (2-year) to 4bps higher (1-year). The benchmark 5-year yield is 1.3bps higher at 0.562% ahead of today’s supply.
  • Swap rates are flat to 1bp higher out to the 30-year and 5bps higher beyond. Swap spreads are generally tighter apart from the 40-year.
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In Tokyo morning trade, JGB futures remain weaker, -15 compared to settlement levels.

  • Japan's September PPI came in above market expectations. In m/m terms we were flat, against a -0.3% forecast, (prior was -0.2%). The y/y outcome rose to 2.8%, against a 2.6% Aug gain and consensus expectation of 2.3%.
  • Japan's weekly investment flows showed a pick-up in offshore purchases of local bonds for the second straight week. Last week the new Japan government cautioned against further BoJ rate rises in the near term.
  • In terms of Japan's outbound flows, we saw a return to offshore purchases of overseas debt. This marks 3 out of the last 4 weeks we have seen positive outflows. Still, given the sell-off in US fixed income since last week's US NFP report, such trends may be more muted for this week.
  • Cash US tsys are slightly richer across benchmarks in today’s Asia-Pac session after yesterday’s heavy session.
  • Cash JGBs are cheaper across benchmarks, with yields flat (2-year) to 4bps higher (1-year). The benchmark 5-year yield is 1.3bps higher at 0.562% ahead of today’s supply.
  • Swap rates are flat to 1bp higher out to the 30-year and 5bps higher beyond. Swap spreads are generally tighter apart from the 40-year.