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Bull-Flattening Extends After BoJ Policy Decision

JGBS

JGB futures gap higher to a new session high (JBU4 at 144.26) before paring gains. Currently, JBU4 sits at 144.10, +64 compared to the settlement levels, following today’s BoJ Policy Decision.

  • The BoJ kept its benchmark interest rate unchanged, maintaining it in a range between 0 to 0.1%, in a unanimous vote.
  • The bank also announced plans to reduce the amount of its bond purchases and will specify the details at the next policy meeting, where it will decide on JGB purchase amounts for the next 1-2 years.
  • Nearly all surveyed economists anticipated the central bank would maintain the current rates, with the majority expecting a reduction in bond purchases.
  • The cash JGB curve has extended its bull-flattening in post-decision dealings, with yields 1-7bps lower. The benchmark 10-year yield is 5.6bps lower at 0.920% versus the cycle high of 1.101%.
  • Swaps are richer across maturities, with rates 2-5bps lower. Swap spreads are mostly wider.
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JGB futures gap higher to a new session high (JBU4 at 144.26) before paring gains. Currently, JBU4 sits at 144.10, +64 compared to the settlement levels, following today’s BoJ Policy Decision.

  • The BoJ kept its benchmark interest rate unchanged, maintaining it in a range between 0 to 0.1%, in a unanimous vote.
  • The bank also announced plans to reduce the amount of its bond purchases and will specify the details at the next policy meeting, where it will decide on JGB purchase amounts for the next 1-2 years.
  • Nearly all surveyed economists anticipated the central bank would maintain the current rates, with the majority expecting a reduction in bond purchases.
  • The cash JGB curve has extended its bull-flattening in post-decision dealings, with yields 1-7bps lower. The benchmark 10-year yield is 5.6bps lower at 0.920% versus the cycle high of 1.101%.
  • Swaps are richer across maturities, with rates 2-5bps lower. Swap spreads are mostly wider.