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JGBS: Little Changed, Looks Past Poor 20Y Auction, Tokyo CPI Tomorrow

JGBS
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JGB futures are stronger and at Tokyo session highs, +19 compared to settlement levels, after brushing off the weakness associated with the results of the 20-year auction. 

  • The 20-year JGB auction showed weak demand, with several key metrics deteriorating versus last month. The low price fell short of dealer expectations, the cover ratio dropped to 3.0369x from 3.4749x, and the auction tail lengthened.
  • Afternoon strength in JGB futures coincided with a strengthening in cash US tsys, benchmarks 2-3bps richer, in today’s Asia-Pac session. Today's focus in the US will be weekly Jobless Claims, Flash PMIs, New Home Sales and Regional Fed data from Chicago and Kansas City.
  • Overnight, BoJ Gov Ueda spoke in Washington where he mentioned that further interest rate hikes are likely, with the challenge being to determine the right timing and size of these increases.
  • Cash JGBs are flat to 2bps richer beyond the 1-year. The benchmark 20-year yield is 0.4bp lower at 1.783% after today’s supply.
  • Swap rates are ~1bp lower out to the 30-year but 2bps higher beyond.
  • Tomorrow, the local calendar will see Tokyo CPI, PPI Services and Dept Store Sales data alongside Coincident and Leading Indices. 
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JGB futures are stronger and at Tokyo session highs, +19 compared to settlement levels, after brushing off the weakness associated with the results of the 20-year auction. 

  • The 20-year JGB auction showed weak demand, with several key metrics deteriorating versus last month. The low price fell short of dealer expectations, the cover ratio dropped to 3.0369x from 3.4749x, and the auction tail lengthened.
  • Afternoon strength in JGB futures coincided with a strengthening in cash US tsys, benchmarks 2-3bps richer, in today’s Asia-Pac session. Today's focus in the US will be weekly Jobless Claims, Flash PMIs, New Home Sales and Regional Fed data from Chicago and Kansas City.
  • Overnight, BoJ Gov Ueda spoke in Washington where he mentioned that further interest rate hikes are likely, with the challenge being to determine the right timing and size of these increases.
  • Cash JGBs are flat to 2bps richer beyond the 1-year. The benchmark 20-year yield is 0.4bp lower at 1.783% after today’s supply.
  • Swap rates are ~1bp lower out to the 30-year but 2bps higher beyond.
  • Tomorrow, the local calendar will see Tokyo CPI, PPI Services and Dept Store Sales data alongside Coincident and Leading Indices.