Richer Early On

Onshore participants were seemingly keen to force a test of the overnight high in JGB futures shortly after the Tokyo re-open but haven’t quite been able to probe the overnight peak as of yet, with the contract last +21 on the day, fading a touch from the early Tokyo peak. Wider cash JGB trade sees the major benchmarks running little changed to 2bp richer across the curve, with 7s leading on the bid in futures. Note that swap spreads are wider across most of the major tenors.

• Japanese PPI data provided beats vs. wider exp. in both M/M & Y/Y terms, with a BoJ official subsequently flagging that the country’s yen-based wholesale import prices saw the largest Y/Y rise on record (dating back to 1980) during June, with the well-documented JPY weakness front and centre when it comes to that dynamic. This is not the sort of “sustainable” inflation that the BoJ is looking to foster, which will mean the Bank will ultimately look through the cost-push driven uptick.