Tight Morning, Small GDP Disappointment, Kishida Looks To Fight Inflation

JGB futures stuck to a narrow range in morning trade, hovering around unchanged levels for most of the session. That left the contract +1 at the lunch bell, while cash JGBs run flat to 1bp richer.

• Preliminary Japanese Q2 GDP data provided a downside surprise, rising by 0.5% Q/Q & 2.2% in annualised terms vs. BBG median exp. Of +0.7% & +2.6%, respectively, although Q1 data was revised higher, with the 0.1% Q/Q fall adjusted to 0.0%. Misses in private consumption and inventories seemingly provided the most notable contributions to the headline miss, with net exports flat, in line with expectations, and business spending beating expectations
• Elsewhere, following the previously announced meeting re: inflation, Japanese Prime Minister Kishida noted that he has asked the trade minister to come up with plans to curb fuel prices, in addition to formulating extra steps when it comes to rising energy and electricity bills. Kishida also instructed the agriculture minister to make no changes to imported wheat prices from October. Further measures are set to be announced in September.