Richer At Lunch After Israel Strikes Iran

At the Tokyo lunch break, JGB futures are sharply higher, +42 compared to the settlement levels. The move is in line with the sharp richening seen in global bond markets in today’s Asia-Pac session on news that Israeli missiles have hit sites in Iran (ABC).

• Markets had moved ahead of the confirmation with reports regarding the closing of Iranian airspace. It appears flights had been diverted away from Iranian Airspace. There seemed to be little flight activity over central Iran where the explosions occurred near the City of Isfahan.
• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined National CPI, which missed expectations.
• Cash US tsys are dealing 8-10bps lower across benchmarks after news of the Israeli attack.
• The cash JGB curve bull-flattened, with yields 1-4bps lower. The benchmark 10-year is the outperformer, with its yield at 0.828% versus the YTD high of 0.891% set this week.
• The swaps curve has also bull-flattened, with rates 1-6bps lower. Swap spreads are mostly tighter.