INDIA: India Updated Swaps Pricing  Vs. Pre-RBI Meeting Levels

Global container shipping rates have reflected the changes in demand related to US tariff deadlines but are down sharply compared to a year ago. Bloomberg container ship tracking data showed that departures were up in June ahead of the earlier July 9 deadline, but vessels departing for the US are down again in July. The tariff date was shifted to August 1. 

Global FBX container rates USD/points

• Container shipping rates spiked in June, particularly for the China/East Asia to east coast of North America route. The total rose 57.5% m/m with the latter up 77.9% m/m. In contrast, the month average for July is down 26% m/m and 32.5% m/m respectively.
• Both indices are down over 50% on the year, which should help alleviate some cost pressures. Risks to shipping in the Red Sea drove a sharp increase in H1 2024, which has now dissipated.
• While the Baltic Freight dry index (bulk commodity rates) also rose sharply in June (+25.3% m/m), it has continued to climb this month up another 6% m/m. It can be a lead indicator of global trade trends and it currently suggests that despite heightened uncertainty, it should hold up for now. Trade grew 3.8% y/y in April with exports up 4.7% y/y. 

Global trade vs Baltic Freight Index

Headlines have crossed from local newspaper Mainichi that PM Ishiba will resign by the end of August. Via Rtrs: "Japan's Prime Minister Shigeru Ishiba has made up his mind to resign, Mainichi newspaper reported on Wednesday." 

• Earlier PM Ishiba wouldn't be drawn on speculation around his future, stating that he would assess the US-Japan trade deal details before making any decision.
• Still, in the aftermath of the weekend upper house result, which saw the ruling LDP coalition lose its majority, Ishiba's future has been speculated on.
• His removal odds per Polymarket has remained elevated this week, but sub recent highs.
• The market reaction has been for USD/JPY to rise, testing up through 147.00 (highs were at 147.20, but we sit back near 147.00 in latets dealings)Japan equities have also rallied further.
• JGB yields are higher across the curve so far today, with focus on the 40yr debt auction in a little while. Risks around fiscal slippage for Japan will remain elevated if Ishiba resigns. 

The Japanese Ministry of Finance (MoF) is set to auction 400 billion of 40-year JGBs today. The previous 40-year auction of 500 billion was held on 28 May 2025.

• Today’s auction follows the announcement of a new trade deal between the U.S. and Japan. President Trump stated that Japan will invest $550 billion into the U.S. and open its markets further to U.S. car and agricultural exports. As part of the deal, Japan will impose a 15% reciprocal tariff on U.S. goods, lower than the previously threatened 25% rate.
• Cash JGBs are 3–8bps cheaper across the curve, with the benchmark 40-year yield up 3.4bps to 3.411%, compared to its recent cycle high of 3.60%.
• The current 40-year auction yield is tracking about 30bps higher than the previous auction.
• However, the 10s40s curve has flattened 30bps since reaching its recent peak.
• Results are due at 0435 BST / 1235 JST.