BoJ Tweaks 10-Year Yield Band, Alaska Summit Sees Combative Start

U.S. Tsys held a narrow range in Asia-Pac hours, looking through the latest BoJ decision, while participants witnessed a combative start to the Sino-U.S. summit in Alaska. T-Notes operated around their late NY levels for the duration of overnight trade, last dealing +0-04+ at 131-13. Cash trade has seen some twist flattening of the Tsy curve, with 30s richening by ~2.5bp on the day.

• JGB futures a touch lower post-BoJ, with some limited chop for futures after the decision proved to be in line with the well-documented Nikkei story that was run on Thursday. JGB futures last -20, softening to lows of the day after the widening of the BoJ's permitted 10-Year JGB yield trading band to -/+0.25%. Cash JGBs now sit marginally cheaper across the curve, more than unwinding the modest bid that was seen in the Tokyo morning. The BoJ stressed that it will be able to enforce the upper limit of its new trading band, while stressing that it can do more re: easing if required. The Bank also tweaked its tiered interest rate system and removed the targets for its ETF & JREIT operations (while maintaining the upper limits), in addition to committing future ETF purchases to TOPIX linked funds..
• Aussie bonds chose to look through the BoJ decision, with local retail sales data also having nothing in the way of meaningful impact on the space. YM -1.0, XM -2.0 at the bell. The weekly AOFM issuance slate provided no talking points, with a typical week of ACGB supply due (the RBA's scheduled A$4.0bn ACGB purchases will once again offset the AOFM's A$2.0bn ACGB issuance in headline nominal terms during the week).