Free Trial

Overnight Gains In Futures Pared, PPI Prints In Line, 5Y Supply Due

JGBS

In Tokyo morning trade, JGB futures are richer, +12 compared to settlement levels, but have scaled back overnight gains despite the PPI data offering few surprises.

  • Japan's Nov PPI was close to expectations, rising 0.2% m/m, while the prior was -0.3%. The y/y outcome rose 0.3%, slightly above the 0.1% forecast, while the prior was 0.9%. The evolution of the PPI continues to be waning y/y momentum. The print is unlikely to shift BOJ thinking ahead of next week's policy meeting.
  • According to MNI’s technicals team, JGB futures slid sharply Friday, refuting the recent bullish bias and returning prices back to support. 143.44, the Oct 31 low, mark key support and a medium-term bear trigger. Initial support is at 145.53, the Nov 27 low.
  • Cash JGBs are slightly mixed, with the futures-linked 7-year as the underperformer (+1.2bps). The benchmark 10-year yield is 0.3bp higher at 0.768%.
  • Ahead of today’s supply, the 5-year is 0.3bp higher at 0.349%. This auction follows a decent 5-year auction in November but comes on the heels of poor digestion at December’s 10- and 30-year JGB supply and November’s 2-year auction. It's worth noting that the cover ratio was the lowest for a 2-year auction since 2009.
  • Swaps are also mixed, with swap spreads mixed across maturities.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.