Participants Return

JGB participants return after a 3-day holiday hiatus, with U.S. the major U.S. Tsy yields little changed to 15bp above Monday’s late Tokyo levels come the close of Thursday’s NY session, which could apply some pressure around the re-open.

• Local data will be headlined by the latest round of Tokyo CPI readings (technical factors are expected to result in a headline jump to +2.3% Y/Y, with the ex-fresh food metric seen at +1.8% Y/Y, per the BBG medians,), while the BoJ will conduct fixed rate operations as it looks to reinforce the upper end of its permitted -/+0.25% 10-Year JGB yield trading band (10-Year yields finished Monday trade around 0.23%, so the upper limit may be tested in early cash trade). On the supply side, the MoF will come to market with off-the-run 1- to 5-Year JGBs via a liquidity enhancement auction.
• There hasn’t been much in the way of meaningful domestic news flow to absorb since Monday’s Tokyo close. Local headlines were dominated by PM Kishida pointing to another wind back of COVID-related border restrictions in June.