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JGBS: Small Yield Swings Despite Slightly Higher Natl CPI Core Measures

JGBS
BulletAPACFixed Income BulletsJapanMarkets

JGB futures are stronger and at Tokyo session highs, +10 compared to settlement levels, despite a slight beat for the core measures in today’s national CPI release. 

  • Japan's nationwide Oct CPI prints were a little above market expectations. The headline printed in line with consensus at 2.3%y/y, versus 2.5% prior. The core ex-fresh food measure was 2.3%y/y, against a 2.2% forecast and 2.4% prior outcome. The core measure which also excludes energy was 2.3%y/y against a 2.2% forecast and 2.1% prior.
  • Services rose 1.5% y/y and 0.4% m/m against September's 1.3% and -0.4% as firms transferred higher labour costs to retail prices. The increase was largely in line with the lower end of the BOJ's forecast.
  • Cash US tsys are ~1bp richer in today’s Asia-Pac session after yesterday’s modest bear-steepener.
  • Cash JGBs have twist-flattened across benchmarks beyond the 1-year, pivoting at the 5-year, with yields 1bp higher to 1bp lower. The benchmark 10-year yield is 1.1bps lower at 1.085% versus the cycle high of 1.108%.
  • Swaps are dealing mixed, with rates 2bps lower (5-10-year zone) to 3bps higher (20-30-year zone). Swap spreads are mixed.
  • On Monday, the local calendar will see Coincident & Leading Indices and Nationwide Dept Sales alongside an Enhanced Liquidity Auction covering 1-5-year JGBs.
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JGB futures are stronger and at Tokyo session highs, +10 compared to settlement levels, despite a slight beat for the core measures in today’s national CPI release. 

  • Japan's nationwide Oct CPI prints were a little above market expectations. The headline printed in line with consensus at 2.3%y/y, versus 2.5% prior. The core ex-fresh food measure was 2.3%y/y, against a 2.2% forecast and 2.4% prior outcome. The core measure which also excludes energy was 2.3%y/y against a 2.2% forecast and 2.1% prior.
  • Services rose 1.5% y/y and 0.4% m/m against September's 1.3% and -0.4% as firms transferred higher labour costs to retail prices. The increase was largely in line with the lower end of the BOJ's forecast.
  • Cash US tsys are ~1bp richer in today’s Asia-Pac session after yesterday’s modest bear-steepener.
  • Cash JGBs have twist-flattened across benchmarks beyond the 1-year, pivoting at the 5-year, with yields 1bp higher to 1bp lower. The benchmark 10-year yield is 1.1bps lower at 1.085% versus the cycle high of 1.108%.
  • Swaps are dealing mixed, with rates 2bps lower (5-10-year zone) to 3bps higher (20-30-year zone). Swap spreads are mixed.
  • On Monday, the local calendar will see Coincident & Leading Indices and Nationwide Dept Sales alongside an Enhanced Liquidity Auction covering 1-5-year JGBs.