Modest Early Moves Stick

JGB futures have nudged higher during the Tokyo afternoon, after unwinding overnight gains during early Tokyo trade. The contract last deals +13 as we work towards the bell.

• Firmer than expected household spending and wage data, coupled with a very modest dip in the wider fixed income sphere and an uptick for the Nikkei 225, provided early sources of pressure. Although it seems to be continued worry surrounding the situation in Taiwan (with Japan’s rhetoric resulting in the cancellation of a bilateral meeting between the Japanese & Chinese Foreign Ministers, in addition to the Japanese ambassador to China being summoned) that allowed a bid to reassert itself in the Tokyo afternoon.
• The early bull flattening has extended as a result, with the major cash JGB benchmarks running little changed to 4.5bp richer across the curve.
• Looking ahead, Monday’s domestic docket includes BoP data and the latest economy watchers survey.