Bear-Steepener After BoJ Ueda’s Comments, BoJ’s April Minutes Tomorrow

JGB futures are weaker and at session cheaps, -19 compared to settlement levels, after today’s remarks in Parliament by BoJ Governor Ueda.

• (MNI) Bank of Japan Governor Ueda told lawmakers Tuesday the Board could raise the policy interest rate at the July 30-31 meeting when the bank announces the detailed plan to reduce its government bond buying. Ueda, however, noted raising the policy interest rate will depend on developments of economic activity and prices at that time. He also said any hike decision would be separate from the JGB reductions.
• Today's BoJ Rinban operations saw mixed results, with both positive and negative spreads and both higher and lower offer cover ratios across the buckets. On balance, the operations generated some slight pressure on longer-dated JGBs in the early rounds of the Tokyo afternoon session.
• Cash US tsys were 1-2bps richer in today's Asia-Pac session.
• The cash JGB curve has bear-steepened, with yields flat to 4bps higher. The benchmark 10-year yield is 1.2bps higher at 0.947% versus the cycle high of 1.101%.
• The swaps curve has twist-steepened, pivoting at the 10s, with rate movements bounded by -0.5bp and +2bps. Swap spreads are mostly tighter.
• Tomorrow, the local calendar will see Trade Balance and Tokyo Condominiums for Sale data alongside the BoJ Minutes of the April Meeting.