Benchmark Futures Tumble Post-BoJ But Quick Rebound Ensues, Gov Kuroda's Presser Eyed

JGBs were volatile as the BoJ's monetary policy review took centre stage. Benchmark futures climbed to a session high of 148.95 in morning trade, but tumbled as trading restarted after the lunch break. During the pause in trading, the Policy Board announced the outcome of its unanimous vote to leave all key monetary policy parameters and dovish forward guidance unchanged, while tweaking the economic forecasts, sharply raising the inflation outlook and charting a flatter growth trajectory.

• Futures slumped to a session low of 148.41 in response to the BoJ's statement before a reassessment of the decision brought a rebound. The contract last deals at 148.66, unch. versus previous settlement.
• All eyes will are on Gov Kuroda's presser (15:30 JST/07:30 BST). His dovish briefing last month inspired aggressive yen sales, which led to Japan's first FX intervention to shore up its currency since 1998.
• Tokyo core CPI inflation, a bellwether of nationwide price dynamics, accelerated to the fastest pace since late 1980s, but the BoJ still sees the outcome as transitory, driven by temporary cost-push factors rather than the desired growth in wages.
• Ahead of the BoJ announcement, PM Kishida unveiled an Y29.1tn fiscal package designed to mitigate the impact of inflationary pressures.
• Cash JGB yields are lower across the curve, save for 5s, with curve flatter on the back of outperformance in the super-long end. 10s pulled back from the BoJ's 0.25% yield cap.