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Bear-Steepener, BoJ Adachi Links FX Weakness To Another Hike, 2Y Supply Tomorrow

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JGB futures are significantly weaker and hovering around session cheaps, -37 compared to settlement levels. Overnight weakness, influenced by US tsys, was exacerbated by a speech by BoJ Board member Seiji Adachi in Kumamoto.

  • Although Adachi emphasised that the central bank's decision to end easing measures does not signify a shift towards monetary tightening, he acknowledged it’s possible that yen weakness could spur price gains and prompt authorities to consider another rate hike earlier than expected. (See BBG link)
  • Japan’s May Consumer Confidence Index falls to 36.2 (39.5 est).
  • Cash US tsys are dealing 1-2bps cheaper in today’s Asia-Pac session after yesterday’s bear-steepening.
  • The cash JGB curve has bear-steepened, with yields flat to 4bps higher. The benchmark 10-year yield is 4.4bps higher at 1.073% after making a fresh cycle high of 1.079%, the highest level since 2011.
  • The swaps curve has also bear-steepened, with rates 1-3bps higher. Swap spreads are mixed.
  • Tomorrow, the local calendar will see Weekly International Investment Flow data alongside 2-year supply.
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JGB futures are significantly weaker and hovering around session cheaps, -37 compared to settlement levels. Overnight weakness, influenced by US tsys, was exacerbated by a speech by BoJ Board member Seiji Adachi in Kumamoto.

  • Although Adachi emphasised that the central bank's decision to end easing measures does not signify a shift towards monetary tightening, he acknowledged it’s possible that yen weakness could spur price gains and prompt authorities to consider another rate hike earlier than expected. (See BBG link)
  • Japan’s May Consumer Confidence Index falls to 36.2 (39.5 est).
  • Cash US tsys are dealing 1-2bps cheaper in today’s Asia-Pac session after yesterday’s bear-steepening.
  • The cash JGB curve has bear-steepened, with yields flat to 4bps higher. The benchmark 10-year yield is 4.4bps higher at 1.073% after making a fresh cycle high of 1.079%, the highest level since 2011.
  • The swaps curve has also bear-steepened, with rates 1-3bps higher. Swap spreads are mixed.
  • Tomorrow, the local calendar will see Weekly International Investment Flow data alongside 2-year supply.