JGBS: Holding Cheaper At Lunch After Tokyo CPI Beat
At the Tokyo lunch break, JGB futures remain weaker, -32 compared to the settlement levels, following higher than expected Tokyo CPI for April, across all measures.
- Next week the BoJ meets, with little changed expected, but today's reading should still add to further tightening expectations for this year (particularly signs of further services related inflation). BoJ Governor Ueda hinted as much in earlier remarks, although tariff uncertainty continues to leave a cloud over the outlook.
- “Accelerating inflation in Tokyo--a leading indicator of Japan-wide trends --raises the possibility of a June rate hike, but ING thinks tariff uncertainty could keep BoJ on hold till July. Firms passing on costs to consumers and expected wage gains this year suggest that "the sustainable inflation the Bank of Japan hoped for has finally arrived," ING economist Min Joo Kang writes.” (per DJ via BBG)
- “Despite trade uncertainty, central bank officials see little need to change their stance on gradual rate increases for now, and the BoJ is likely to convey its intention to raise rates once uncertainties from tariffs go away.” (per BBG)
- Cash US tsys are dealing little changed across benchmarks in today's Asia session.
- Cash JGBs are 1-2bps cheaper across benchmarks.
- Swap rates are 2-4bps higher, with the belly leading. Swap spreads are wider.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
CHINA PRESS: More Provinces See Positive Property Investment Growth
Out of China’s 31 provinces, eight saw positive growth in real-estate investment in the first two months, an increase from four during 2024, Yicai.com reported, noting more than 50% saw declines narrowing. Heilongjiang province's property investment grew by 33.5% y/y in the Jan-Feb period, following the 27.3% and 27.9% drop in 2023 and 2024. Yunnan province fell 0.9%, narrowing from the about 30% drop in the past three years. Nationwide property investment fell 9.8% y/y overall in the first two months, narrowing 0.8 percentage points from 2024.
CHINA PRESS: China's Rapid Issuance Of Bonds Shows Government Intention
China’s rapid issuance of new special bonds so far this year demonstrates local governments' intention to stimulate market vitality actively, according to Zhang Yiqun, director at the Jilin Provincial Institute of Fiscal Science. The Securities Daily notes the total scale of local government bonds issued reached CNY2.5 trillion by March 25, up 89% y/y, of which newly added special bonds and refinancing special bonds accounted for 31% and 50% respectively.
CHINA PRESS: China Expenditure Shows Frontloading Taking Effect
China’s general budget expenditure reached CNY 4.5 trillion during January and February, accounting for 15.2% of the annual spending plan, representing the highest average level for the same period in three years, highlighting the government’s commitment to frontloading fiscal policy in 2025, according to experts interviewed by Xinhua News Agency. Securities transaction stamp tax totalled CNY23 billion, up 58.9%, y/y, reflecting the success of market stabilization measures, according to Luo Zhiheng, chief economist at Yuekai Securities.
