A Little Firmer, No Surprises From BoJ

JGBs futures extended on a modest morning uptick after the BoJ provided no surprises, leaving its monetary policy settings unchanged, alongside a mark higher in its inflation expectations, mark lower in immediate GDP forecast and changes to language that reflected those dynamics e.g. inflation expectations have risen. Note that the central mantra of the Bank’s monetary policy outlook remains unchanged, as it reiterated its forward guidance (including the dovish bias within), while it flagged the risks that commodity prices and swings in FX movements pose to inflation.

• Elsewhere, local press reports pointed to PM Kishida reshuffling his cabinet in September, which isn’t a new idea.
• JGB futures have nudged away from best levels ahead of the close, aided by the resumption of gas flows through the Nord stream 1 pipeline that runs between Russia & Europe. The contract is +!0 last, while cash JGBs run little changed to 2bp richer on the day, bull flattening.
• National CPI data and a liquidity enhancement auction for off-the-run 5- to 15.5-Year JGBs.