PHP: USD/PHP Rebounds Back Above 57.00 As Onshore Markets Return

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.

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. 

• The auction achieved a cover ratio of 2.2114x, with a high yield of 3.135%, a low price of 99.20, and 33.3333% of bids allotted at the high yield.
• The previous auction was notably weak, with the high yield clearing well above dealer expectations. According to a Bloomberg survey, the market anticipated a yield of 3.085%, while the actual result came in at 3.135%.
• The auction’s cover ratio declined sharply to 2.2114x, down from 2.9203x at the previous issuance and marking the weakest demand since July 2024.
• Results are due at 0435 BST / 1235 JST.