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JGBS: Bull-Steepener Turns Into Bear-Steepener After BoJ Takata

JGBS
BulletAPACFixed Income BulletsJapanMarkets

JGB futures are slightly weaker and near session cheaps, -3 compared to settlement levels.

  • The key local driver for the market was a speech by BoJ board member Takata. He reiterated that the central bank is in a position to adjust policy rates further if the outlook is met.
  • He added that further policy adjustments should still in gradual (in the aftermath of the Jan hike), but noted such shifts need to be taken to avoid upside inflation risks (with the weaker yen and wage hikes a risk). The central bank is closer to achieving its inflation target as well. Monetary conditions remain easy Takata noted, even after the Jan hike.
  • Cash US tsys are flat to 1bp richer in today’s Asia-Pac session.
  • Cash JGBs have shifted from a modest bull-steepener earlier in the session to a mild bear-steepener, with yields now flat to 1bp higher across benchmarks. The benchmark 10-year yield is 1.2bp higher at 1.442% after hitting a fresh cycle high of 1.446%.
  • Swap rates are 1-5bps higher, with the 20-year underperforming. Swap spreads are wider.
  • Tomorrow, the local calendar will see weekly International Investment Flow data alongside the Auction for Enhanced-Liquidity 5-15.5-year.
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JGB futures are slightly weaker and near session cheaps, -3 compared to settlement levels.

  • The key local driver for the market was a speech by BoJ board member Takata. He reiterated that the central bank is in a position to adjust policy rates further if the outlook is met.
  • He added that further policy adjustments should still in gradual (in the aftermath of the Jan hike), but noted such shifts need to be taken to avoid upside inflation risks (with the weaker yen and wage hikes a risk). The central bank is closer to achieving its inflation target as well. Monetary conditions remain easy Takata noted, even after the Jan hike.
  • Cash US tsys are flat to 1bp richer in today’s Asia-Pac session.
  • Cash JGBs have shifted from a modest bull-steepener earlier in the session to a mild bear-steepener, with yields now flat to 1bp higher across benchmarks. The benchmark 10-year yield is 1.2bp higher at 1.442% after hitting a fresh cycle high of 1.446%.
  • Swap rates are 1-5bps higher, with the 20-year underperforming. Swap spreads are wider.
  • Tomorrow, the local calendar will see weekly International Investment Flow data alongside the Auction for Enhanced-Liquidity 5-15.5-year.