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JGBS: Bull-Flattener After Strong 20Y Auction, 82% Chance Of BoJ Hike Next Week

JGBS
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JGB futures remain stronger and at session highs, +35 compared to settlement levels.

  • “Nomura analysts bring forward their call for the next BoJ rate hike to January from March, as recent comments suggest it is more confident about factors likely to influence the decision. Citing a BoJ branch managers meeting and speech by Deputy Gov. Himino, the analysts think the BoJ will conclude there is less uncertainty about wage hikes in Japan and US policy.” (per Dow Jones)
  • OIS market expectations currently indicate: an 82% probability of a 25bp hike in January; a cumulative 92% chance by May; and a full 25bp increase fully priced in by May 2025.
  • Cash US tsys are 1bp cheaper to 1bp richer, with a flattening bias, in today’s Asia-Pac session. Weekly Jobless Claims and Retail Sales highlight today’s US calendar.
  • Cash JGBs have bull-flattened following the strong 20-year auction, with benchmark yields 1-5bps richer. The benchmark 20-year yield is 4.8bps lower at 1.972%.
  • Notably, today’s 20-year JGB auction featured an outright yield at a cycle high, 10–15bps above last month’s auction.  
  • Swap rates are flat to 2bps higher, with swap spreads wider.
  • Tomorrow, the local calendar will see International Investment Flow data.
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JGB futures remain stronger and at session highs, +35 compared to settlement levels.

  • “Nomura analysts bring forward their call for the next BoJ rate hike to January from March, as recent comments suggest it is more confident about factors likely to influence the decision. Citing a BoJ branch managers meeting and speech by Deputy Gov. Himino, the analysts think the BoJ will conclude there is less uncertainty about wage hikes in Japan and US policy.” (per Dow Jones)
  • OIS market expectations currently indicate: an 82% probability of a 25bp hike in January; a cumulative 92% chance by May; and a full 25bp increase fully priced in by May 2025.
  • Cash US tsys are 1bp cheaper to 1bp richer, with a flattening bias, in today’s Asia-Pac session. Weekly Jobless Claims and Retail Sales highlight today’s US calendar.
  • Cash JGBs have bull-flattened following the strong 20-year auction, with benchmark yields 1-5bps richer. The benchmark 20-year yield is 4.8bps lower at 1.972%.
  • Notably, today’s 20-year JGB auction featured an outright yield at a cycle high, 10–15bps above last month’s auction.  
  • Swap rates are flat to 2bps higher, with swap spreads wider.
  • Tomorrow, the local calendar will see International Investment Flow data.