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JGBS: Solid Rally In Cash Bonds, PPI Services Data Tomorrow

JGBS
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JGB futures are sharply stronger but off session highs, +50 compared to the settlement levels, after trading resumed after yesterday’s holiday.

  • Outside of the previously outlined Jibun Bank Flash PMIs, there hasn't been much by way of domestic drivers to flag.
  • Today’s Enhanced Liquidity Auction covering 1-5-year OTR JGBs accepted JPY499.5bn of bonds, with an average accepted spread of -0.043 and a bid/cover ratio of 3.81x.
  • "Bank of Japan watchers are keeping a close eye on the leadership election of the nation’s ruling Liberal Democratic Party for potential monetary policy implications, with attention focused on a strong advocate of maintaining an easing stance." (See BBG link)
  • Cash US tsys are flat to 1bp cheaper in today’s Asia-Pac session. Today’s US calendar will see the House Price Index, Consumer Confidence and Regional Fed Mfg data.
  • Cash JGBs are mostly richer across benchmarks beyond the 1-year (+2.3bps), with 2-year to 20-year yields 2-4bps lower.
  • The swaps curve has twist-steepened, with yields 3bps lower to 5bps higher. Swap spreads are mostly wider.
  • Tomorrow, the local calendar will see PPI Services data alongside BoJ Rinban Operations covering 1- to 25-year JGBs and Inflation-Indexed Bonds. 
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JGB futures are sharply stronger but off session highs, +50 compared to the settlement levels, after trading resumed after yesterday’s holiday.

  • Outside of the previously outlined Jibun Bank Flash PMIs, there hasn't been much by way of domestic drivers to flag.
  • Today’s Enhanced Liquidity Auction covering 1-5-year OTR JGBs accepted JPY499.5bn of bonds, with an average accepted spread of -0.043 and a bid/cover ratio of 3.81x.
  • "Bank of Japan watchers are keeping a close eye on the leadership election of the nation’s ruling Liberal Democratic Party for potential monetary policy implications, with attention focused on a strong advocate of maintaining an easing stance." (See BBG link)
  • Cash US tsys are flat to 1bp cheaper in today’s Asia-Pac session. Today’s US calendar will see the House Price Index, Consumer Confidence and Regional Fed Mfg data.
  • Cash JGBs are mostly richer across benchmarks beyond the 1-year (+2.3bps), with 2-year to 20-year yields 2-4bps lower.
  • The swaps curve has twist-steepened, with yields 3bps lower to 5bps higher. Swap spreads are mostly wider.
  • Tomorrow, the local calendar will see PPI Services data alongside BoJ Rinban Operations covering 1- to 25-year JGBs and Inflation-Indexed Bonds.