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JGBS: Twist-Flattener, Rengo Wage Hike News Weighs, Natl CPI Tomorrow

JGBS
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JGB futures are weaker, currently trading at session lows in Tokyo, down 7 points from settlement levels. 

  • A report indicating that Japan's Rengo union will seek wage hikes of at least 5% next year appears to have triggered a sharp reversal in JGB futures. Futures closed the overnight session up 26 points compared to settlement levels.
  • In 2024, negotiated wage gains tracked by the Rengo Federation reached a 33-year high of 5.1%.
  • However, part of today's selloff in the Tokyo session can be attributed to the US Treasury market, with yields trading 1-2bps higher and showing a steepening bias in the Asia-Pacific session.
  • Outside of the previously outlined trade balance data, there hasn't been much by way of domestic data drivers to flag. The Tertiary Industry Index fell 1.1% m/m in August.
  • The cash JGB curve has twist-flattened, pivoting at the 20-year, with yields 3bps higher to 3bps lower.
  • The MoF accepted Y399.3bn at today’s Liquidity Enhancement Auction.
  • Swap rates are flat to 4bps higher, with a steepening bias. Swap spreads are tighter out to the 5-year and wider beyond.
  • Tomorrow, the local calendar will see National CPI and Weekly International Investment Flow data alongside BoJ Rinban Operations covering 1-10-year and 25-year+ JGBs.
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JGB futures are weaker, currently trading at session lows in Tokyo, down 7 points from settlement levels. 

  • A report indicating that Japan's Rengo union will seek wage hikes of at least 5% next year appears to have triggered a sharp reversal in JGB futures. Futures closed the overnight session up 26 points compared to settlement levels.
  • In 2024, negotiated wage gains tracked by the Rengo Federation reached a 33-year high of 5.1%.
  • However, part of today's selloff in the Tokyo session can be attributed to the US Treasury market, with yields trading 1-2bps higher and showing a steepening bias in the Asia-Pacific session.
  • Outside of the previously outlined trade balance data, there hasn't been much by way of domestic data drivers to flag. The Tertiary Industry Index fell 1.1% m/m in August.
  • The cash JGB curve has twist-flattened, pivoting at the 20-year, with yields 3bps higher to 3bps lower.
  • The MoF accepted Y399.3bn at today’s Liquidity Enhancement Auction.
  • Swap rates are flat to 4bps higher, with a steepening bias. Swap spreads are tighter out to the 5-year and wider beyond.
  • Tomorrow, the local calendar will see National CPI and Weekly International Investment Flow data alongside BoJ Rinban Operations covering 1-10-year and 25-year+ JGBs.