JGBS: Futures Holding An Uptick At Lunch

At the Tokyo lunch break, JGB futures are holding an uptick, +2 compared to the settlement levels but well off overnight closing levels after the release of today’s household spending data

• Japan household spending moved back into positive spending in y/y terms in July. However, at +0.1%y/y it was well short of market expectations, which sat at 1.2%. The June dip was -1.4%y/y. In m/m terms, spending fell 1.7%.
• Today's print comes after yesterday's stronger-than-expected labour earnings data. The authorities will be hoping that spending trends firm further as we progress through Q3. At the margin though today's data adds to the case for a steady BoJ outcome at the September meeting, as the central bank may want to wait for further details around consumption, before adjusting policy further.
• Cash US tsys are little changed in today’s Asia-Pac session ahead of US Non-Farm Payrolls data later today.
• Cash JGBs are slightly mixed, with yield swings bounded by +/- 1.5bps. The benchmark 10-year yield is 0.2bps higher at 0.882% versus the cycle high of 1.108%.
• The swaps curve has slightly bear-flattened, with rates flat to 1bp higher. Swap spreads are mixed.
• Today, the local calendar will also see Coincident & Leading Indices later.