JGBS: Cash Little Changed At Lunch, Gov Ueda Talks Tariffs
In early afternoon dealings, JGB futures are stronger and at session highs, +15 compared to settlement levels.
- Outside of the previously outlined monetary base date, BoJ Governor Ueda has stated that US tariffs could significantly impact trade activity in affected nations, depending on their size and area. Ueda expressed uncertainty about the overall picture of the policies, awaiting an official announcement, and will closely watch developments to grasp their economic impacts.
- “A Bank of Japan rate hike in May would be too early, according to Kazuya Shimba, Secretary General of the Democratic Party for the People, due to the need to assess the impact of US tariffs and ongoing wage talks.” (per BBG)
- Cash US tsys are 2-3bps cheaper after yesterday's modest gains ahead of Wednesday afternoon's Liberation (tariff) Day announcement from the White House (1600ET est). Trump's tariffs will take immediate effect after they are announced.
- The latest information includes: a CNBC reporter posting on X, citing Republican Rep. Kevin Hern, that the tariff rates announced Wednesday will be the highest they will go and countries can then take steps to bring the tariffs down.
- Cash JGBs are little changed across benchmarks out to the 10-year and 1-2bps richer beyond.
- Swap rates are little changed. Swap spreads are mixed.
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JGBS: Cash Bonds Cheaper At Lunch, 30YY At Highest Since 2008
At the Tokyo lunch break, JGB futures are holding weaker at session cheaps, -28 compared to the settlement levels.
- Jibun Bank and S&P Global February Manufacturing PMI rises to 49 from 48.7 in January.
- Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after an emergency security summit in London on Sunday raised bets of increased European debt supply for defence spending. UK Prime Minister Keir Starmer convened the summit, including France’s Emmanuel Macron, as well as delegations from Canada, Germany, Norway and Turkey, in a bid to strengthen Ukraine’s position, secure a “lasting peace” and plan for security guarantees. (per BBG)
- Cash JGBs are flat (40-year) to 3bps cheaper (5-10-year zone) across benchmarks. The benchmark 10-year yield is 3.0bps higher at 1.408% versus the cycle high of 1.466%.
- The 30-year yield is 0.5bp higher at 2.365%, the highest since 2008.
- Swap rates are 1-2bps higher. Swap spreads are mixed.
STIR: RBA Dated OIS Pricing Mixed Vs. Pre-RBA Decision Levels
RBA-dated OIS pricing is flat to 3bps firmer across meetings today.
- Nevertheless, pricing remains mixed compared to February’s pre-RBA Decision levels—meetings through July are 2-5bps firmer, while those beyond are 2-9bps softer.
- Last week, January headline CPI inflation printed slightly lower than expected at 2.5% y/y, in line with December. However, the underlying trimmed mean rose 0.1pp to 2.8%, but still below the top of the RBA’s 2-3% band. The first month of the quarter has limited updates for services inflation. The seasonally adjusted data is consistent with the RBA remaining cautious with it stating that “upside risks remain”.
- A 25bp rate cut in April is given a 9% probability, with a cumulative 57bps of easing priced by year-end (based on an effective cash rate of 4.09%).
Figure 1: RBA-Dated OIS – Today Vs. Pre-RBA Levels
Source: MNI – Market News / Bloomberg
CHINA PRESS: Two Session To Highlight Consumption, Tech Innovation
Authorities are expected to focus on promoting consumption and developing AI, and other emerging sectors during the upcoming “Two Sessions” this week, China Fund News reported, citing analysts. Except for the trade-in program for consumer goods, more medium- and long-term measures to boost spending are also expected, such as offering maternity allowance and supportive measures for pension and social security, said Zhu Guoqing, deputy general manager at Pengyang Fund.
