JAPAN: SOUTH KOREA-Lee: Japan 'Indispensable Partner' For Econ Ahead Of Visit

Aug-15 09:54

Ahead of his 23-24 August visit to Japan, his first since taking office in June, South Korea's President Lee Jae-mying called Japan an "indispensable partner" for economic growth. This came while delivering the president's annual speech marking the end of Japan's colonial occupation of the Korean peninsula in 1945. 15 August is a date fraught with historical sensitivities, marking 'Liberation Day' in South (and North) Korea, and Memorial Day for the End of the War in Japan. 

  • In a notable comment, Japanese PM Shigeru Ishiba, delivering the head of gov'ts annual 15 August address, utilised the word "remorse" when talking about Japan's conduct in the war. This was picked up by both Japanese and South Korean media, given it was the first time in 13 years that a Japanese PM had used that term in the 15 August speech.
  • The day has not passed without incident, with Japanese Agriculture Minister Shinjiro Koizumi and former Economic Security Minister Sanae Takaichi (among other ministers and senior politicians) attending memorial events at the Yasukuni Shrine. As Reuters notes, "Japan's Asian neighbours view [the shrine] as a symbol of its wartime aggression." The South Korean gov't expressed its "deep disappointment and regret" at the officials' attendance.
  • Notably, Koizumi and Takaichi are viewed as the frontrunners to succeed Ishiba should he be forced from office following the poor performance of the governing Liberal Democratic Party (LDP)in recent upper house elections. Attending the shrine could be viewed as an effort to enhance their conservative credentials as the LDP loses support to the right-wing nationalist Sanseito party. 

Historical bullets

PORTUGAL T-BILL AUCTION RESULT: 12-month BT Results

Jul-16 09:51
Type12-month BT
MaturityJul 17, 2026
AmountE1bln
TargetE1.00-1.25bln
PreviousE750mln
Avg yield1.906%
Previous1.941%
Bid-to-cover2.83x
Previous3.22x
Previous dateJun 18, 2025

GILTS: Off Lows As Support Holds & Oil Softens, 50bp BoE Cuts Priced Through Dec

Jul-16 09:37

Gilts trade away from lows after support in futures held and with oil prices edging lower. Still, yields are higher across the curve in the wake of this morning’s firmer-than-expected CPI reading.

  • Gilt futures last -16 at 91.41 vs. session lows at 91.17. June 2 low (91.16) provides key support.
  • Yields 1.5-2.5bp higher, 5s under the most pressure.
  • 2s remain rangebound.
  • 10s briefly pierced the June 9 high (4.673%).
  • STIRs price around ~50bp of cuts through year-end, with over 80% odds of the next cut priced through August. Market priced ~58bp of cuts through year-end at one stage on Monday.
  • A reminder that while the UK CPI data was firmer-than-expected it wasn’t too out of line vs. BoE expectations.
  • That means that the market remains comfortable with discounting a once per quarter rate cutting cycle through year end, given the softening labour market and still stagnant economic growth.
  • What’s more, BoE Governor Bailey’s weekend comments were dovish and centred on the labour market, which increases the importance of tomorrow’s labour market data release.
  • The 4.50% Sep-34 gilt PGT saw solid enough demand and pricing metrics but wasn’t quite as well-received as yesterday’s PGT.
  • Little of note on the UK calendar for the remainder of the day, leaving focus on U.S. PPI data and any ongoing reaction to the domestic CPI print.

BoE Meeting

SONIA BoE-Dated OIS (%)

Difference vs. Current Effective SONIA Rate (bp)

Aug-25

4.009

-20.8

Sep-25

3.956

-26.1

Nov-25

3.794

-42.3

Dec-25

3.710

-50.7

Feb-26

3.582

-63.5

Mar-26

3.549

-66.8

GERMAN AUCTION RESULTS: 30-year Bund results

Jul-16 09:33
 1.25% Aug-48 Bund2.90% Aug-56 Bund
ISINDE0001102432DE000BU2D012
Total soldE1blnE1.5bln
AllottedE800mlnE1.129bln
PreviousE1.313blnE4bln
Avg yield3.13%3.22%
Previous3.09%3.03%
Bid-to-offer3.69x1.05x
Previous3.68x 
Bid-to-cover4.60x1.40x
Previous4.20x 
Avg Price69.3993.78
Low Price69.3893.76
Pre-auction mid69.27693.710
Prev avg price69.8697.38
Prev low price69.85 
Prev mid-price69.810 
Previous date14-May-2506-May-25