Markets
While upward pressure on oil prices eased throughout the day yesterday, (natural) gas prices kept adding to the recent gains. The Dutch TTF future hit the €50/MWh for the first time in a month, up 25% from their recent lows (which in turn were about a third higher than pre-war levels). That followed reports from key producer Qatar pausing its push to ramp up LNG output over concerns that transit through the Hormuz Strait isn’t safe. Gas is an important component in the euro area’s energy mix and features the ECB discussions as prominent as oil does. Markets however took comfort from the latter’s price developments over the last 24 hours. Core bonds recovered from their Wednesday whammy, dragging German yields up to 6 bps down at the front end. An October ECB hike remains more than fully priced in. Longer maturities ended flat after turning in additional, marginal gains earlier on the day. Gilts outperformed Bunds with UK yields shedding 6.7-9 bps across the curve. The US Treasury yield curve bull steepened as well, correcting lower by 0.8-4.5 bps. A $22bn 30-yr auction yesterday stopped through with demand metrics strong, helping to push bonds higher be it temporarily. Stock markets rebounded, led by tech (Nasdaq +1.3%) and kept the USD slightly in the defensive. DXY finished sub 101. EUR/USD rose a bit higher north of the 1.14 big figure. USD/JPY stabilized around 162+ levels. The yen, however, is taking the lead in Asian dealings this morning. The pair pushes lower towards 161.5. That followed on news that the Japanese government is pursuing measures that would include one of the world’s largest pension funds to do substantially greater investments in Japanese financial assets (see below). It’s triggering some of the biggest moves overnight (including in JGB’s). Other news is limited. The US said that technical talks with Iran are continuing, perhaps easing some concerns for the conflict to re-escalate into a full blown war. It is, however, nothing new. President Trump, after considering the ceasefire to be over for him, kept the door open for talks, leaving it up to the negotiators to do as they see fit. Brent even slightly grinds higher to $76. Today’s eco calendar is all but empty. In technical and probably uninspiring trading going into the weekend we do keep an eye at the long end of the curve that appears to be easily triggered into a yield rise but not as much into a decline.
News & Views
Japanese Finance Minister Satsuki Katayama said the government wants the country’s pension funds to substantially lift investments in domestic assets. The Fin Min explained this aim as she assessed that the government wants ‘to ensure that the public can directly benefit from Japan’s economic growth’. From a market point of view, it would be especially relevant for Japanese financial markets if the Government Pension Investment Fund, managing 293.6 trillion yen (about $1.8 tn), would allocate more of its investments into the domestic markets. Japanese markets at least performed constructively this morning with the Nikkei gaining 1.7%. Long-term Japanese bonds rebound after a difficult period of late (10-y JGB -9.6 bps; 30-y JGB -7.3 bps). Even the yen rebounded from the USD/JPY 162.4 area to the USD/JPY 161.5 area. Regarding Japanese data, Japanese June PPI printed 0.4% m/m and 7.1% y/y (from 1.1% and 6.6% in May). The y/y measure was the highest since the spring of 2023. This kind of pass-through of costs also still supports the case for a continuation of policy normalization.
Inflation in Mexico eased for the third consecutive month in June. Headline inflation declined 0.27% m/m, slowing y/y inflation from 3.94% to 3.37%, the lowest figure since early 2021. Core inflation printed at 0.24% m/m and 4.03% y/y (from 4.19%). The central Bank of Mexico has an inflation target of 3% with a tolerance band of 1ppt. It published the minutes of its June 25 decision when it left the policy rate unchanged at 6.5% in a unanimous decision. The unchanged decision came after a 25 bps cut in May. The bank saw appropriate to keep the policy rate at current level and expects that it might stay at that level for some time to come, even as it discussed upside inflation risks especially in the services sector. The recent decline of inflation was seen as having been driven by non-core components. After a sustained rally throughout most of 2025, the peso over the previous months holds rather strong in a relative tight range between USD/MXN 17.1 and 17.7.
 gas prices kept adding to the recent gains. The Dutch TTF future hit the €50/MWh for the first time in a month, up 25% from their recent lows (which in turn were about a third higher than pre-war levels).){kind=link}