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JGBS: Cheaper, Looks Past Political Uncertainty, 2Y Supply Tomorrow

JGBS
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JGB futures are weaker but off session cheaps, -14 compared to settlement levels. Futures opened sharply higher after weekend lower house elections showed the LDP coalition had lost its majority. However, that move was quickly reversed. PM Ishiba is currently giving a press briefing.

  • The move away from session bests had been assisted by cash US tsys, which are 2-3bps cheaper in today’s Asia-Pac session, extending Friday’s modest cheapening. Market participants will be looking for US inflation and payroll figures this week to guide on the pace of interest rate cuts by the Federal Reserve this year.
  • Cash JGBs are flat to 5bps cheaper across benchmarks, with a steepening bias. The benchmark 2-year yield is unchanged at 0.454% ahead of tomorrow's supply.
  • Swap rates are 1-6bps higher, with a steepening bias, for maturities beyond the 2-year. Swap spreads are wider.
  • Tomorrow, the local calendar will see Jobless Rate and Job-To-Applicant Ratio data alongside 2-year supply.
  • The BoJ Policy Meeting is on Wednesday and Thursday, with the board likely to leave its policy interest rate at 0.25% amid unstable financial markets and uncertainties over a US soft-landing. Attention shifting to further wage data and other board communications could offer insight into the chances of a December increase.
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JGB futures are weaker but off session cheaps, -14 compared to settlement levels. Futures opened sharply higher after weekend lower house elections showed the LDP coalition had lost its majority. However, that move was quickly reversed. PM Ishiba is currently giving a press briefing.

  • The move away from session bests had been assisted by cash US tsys, which are 2-3bps cheaper in today’s Asia-Pac session, extending Friday’s modest cheapening. Market participants will be looking for US inflation and payroll figures this week to guide on the pace of interest rate cuts by the Federal Reserve this year.
  • Cash JGBs are flat to 5bps cheaper across benchmarks, with a steepening bias. The benchmark 2-year yield is unchanged at 0.454% ahead of tomorrow's supply.
  • Swap rates are 1-6bps higher, with a steepening bias, for maturities beyond the 2-year. Swap spreads are wider.
  • Tomorrow, the local calendar will see Jobless Rate and Job-To-Applicant Ratio data alongside 2-year supply.
  • The BoJ Policy Meeting is on Wednesday and Thursday, with the board likely to leave its policy interest rate at 0.25% amid unstable financial markets and uncertainties over a US soft-landing. Attention shifting to further wage data and other board communications could offer insight into the chances of a December increase.