Daily digest market movers: BoJ consults bond traders
- A heat wave in Japan is squeezing the energy grid to its maximum capacity. In Tokyo, regulators are monitoring the situation, industry minister Ken Saito said in a regular briefing on Tuesday, according to Bloomberg.
- The Bank of Japan survey round with bond market participants reveals a wide range of options for bond-cutting, ranging from zero over 2-3 trillion yen to a maximum of 4 million yen in buybacks.
- Japanese equities have had a field day this Tuesday, soaring nearly 1% in both the Topix and the Nikkei. European equities are struggling, while US futures are in the green.
- The CME Fedwatch Tool is broadly backing a rate cut in September despite recent comments from Fed officials. The odds now stand at 73.6% for a 25-basis-point cut. A rate pause stands at a 22.9% chance, while a 50-basis-point rate cut has a slim 3.5% possibility.
- The Overnight indexed Swap curve for Japan shows a 60.1% chance of a rate hike on July 31 and a 35.2% chance for a hike on September 20.
- The US 10-year benchmark rate trades at the lower end of this week’s range near 4.29%.
- The benchmark 10-year Japan Treasury Note (JGB) trades around 1.09%, just a touch away from a fresh high for this week.
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