KRW: Onshore Markets Return, 1mth NDF Implying Spot Back Above 1420

JGB futures finished the post Tokyo close on Tuesday at 137.76, -.24 versus settlement levels. Some negative lead likely came from core markets elsewhere, with US Tsy futures weakening ahead of key inflation data (out later today and tomorrow). 

• Also note some likely weight from news wires headlines. A set of hawkish comments from the BOJ, indicating there is a "chance of" a hike this year despite the political turmoil following PM Ishiba's resignation Sunday, which also weighed on USD/JPY (but follow through to the downside was limited). "Some officials are even of the view that a hike might be appropriate as early as October", the Bloomberg article added.
• Market pricing for a hike in Oct remains fairly modest at this stage (implied rate of around 0.57%, versus a current effective policy rate of 0.48%).
• For JGB futures, recent lows for futures rest close to 137.20, while recent highs were at 138.37. The general technical bias remains for a bearish threat for futures.
• In the cash JGB space, the 10yr yield finished up just above 1.57%, while the 30yr was near 3.27%. The 2/30s curve finished up around +243bps.
• The data calendar is empty today. Rtrs noted earlier: "Japanese manufacturers' sentiment was its best in more than three years in September, the Reuters Tankan poll showed, with trade uncertainties easing after Japan reached a tariff deal with the U.S. in July." The actual Q3 Tankan survey is released on Oct 1.
• We do have 5yr debt supply on tap today. The last 5yr debt auction had a bid to cover ratio sub 3.00. 

Aussie bond futures are biased lower in the first part of Tuesday dealings. 10yr futures (XM) were off 3.5bps to 95.675, likewise for 3yr futures, last at 93.525. This follows the softer tone to US Tsy futures from Tuesday US trade, which has extended into early Wednesday Asia Pac dealings. US NFP revisions we weaker than forecast but we do have key inflation prints coming up.

• For Aussie futures we remain within recent ranges, but comfortably above earlier Sep lows.
• In the cash ACGB yield space we are close to 3bps firmer across the benchmarks, so lagging the US Tsy yield move from Tuesday. The 3yr benchmark was last at 3.45%, the 10yr close to 4.29%. The AU 3/10s curve was last around +84bps.
• The AU-US10yr spread is around +20bps, still elevated compared to 2025 averages.
• The local data calendar is empty today.  

NZGB benchmark yields are around 2-4bps firmer across the curve, led by the back end. This follows a firmer US Tsy yield backdrop from Tuesday trade. NFP revisions we weaker than forecast but we do have key inflation prints coming up. 

• For the NZGB 2yr yield we are back above 2.96%, around 2bps firmer. This benchmark has struggled to hold moves north of 3.00% since the RBNZ cut rates back in August. The 10yr yield up close to 4bps, last around 4.33.%.
• This leaves the NZ 2/10s curve around 2bps steeper at +137bps.
• The NZ 2yr swap rate is relatively steady so far today, sitting around 2.75%.
• On the data front, we had July net migration at just above +2k, while the annual migration figure picked up to +13k.
• From our policy team, RBNZ Leadership Woes Present Reform Opportunity. Suzanne Snively, a former board member and chair of the independent experts panel that led the 2017-22 RBNZ Act review, said the government may revisit the balance between RBNZ independence and ministerial control, with Finance Minister Nicola Willis likely to reopen debate over.  
• Onshore media reported from yesterday: "New Zealand’s main opposition Labour Party is open to having a discussion about the RBNZ’s 1-3% inflation target, the NZ Herald reports, citing finance spokesperson Barbara Edmonds." (via BBG).
• Also note, RBNZ Chief Economist Conway speaks to the Auckland Chamber of Commerce, RBNZ Manager Balance Sheet Policy Craigie will speak on the Liquidity Management Review at 1330.