JGBS: Yields Higher Ahead Of 20Y Supply, BoJ Tamura Speaking

In Tokyo morning trade, JGB futures (JBZ4) are weaker, -19 compared to settlement levels.

• Japan August PPI was down 0.2% m/m, against a flat consensus expectation. This left the y/y outcome at 2.5% against a 2.8% forecast and 3.0% prior.
• All industry and large manufacturing sentiment improved in Q3, relative to Q2 outcomes.
• Local investors slowed their purchases off overseas debt, with net selling of ¥222.6bn bonds last week. This was the first week of net selling in this segment since the tail end July. Up until the end of August we had seen just under ¥7.3trln in domestic purchases of overseas debt. Momentum still appears positive into this space given the global fixed income backdrop and some decline in hedging costs.
• In terms of flows into Japan bonds, offshore investors did purchase local bonds last week, but this only partially reversed the prior week's outflow.
• BoJ Board Member Tamura is speaking now.
• Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s post-CPI sell-off. The focus now turns to today's US PPI and Weekly Claims data.
• Cash JGBs are cheaper across benchmarks, with the 1-year leading (+2.3bps). The benchmark 20-year yield is 1.0bp higher at 1.682% ahead of today’s supply.
• Swap rates are 1-5bps higher, with the curve steeper.