Cash Bond Bear-Steepener After BoJ Minutes For April Meeting

In Tokyo morning trade, JGB futures have pared overnight gains and are currently -4 compared to settlement levels.

• (MNI) Some Bank of Japan board members saw the possibility that developments of foreign exchange rates could warrant monetary policy action at the April 25-26 policy meeting, despite forex rates not subject to direct control by monetary policy, the meeting minutes showed on Wednesday.
• “One of these members commented that, given factors such as the trilemma of international finance monetary policy should not be employed to achieve stability in foreign exchange rates,” the minutes showed.
• Japan posted its second straight trade deficit of JPY1.22tn, following April's JPY465.6bn. Exports posted their sixth straight y/y rise in May, up 13.5% driven by automobile and semiconductor manufacturing equipment shipments. Imports rose 9.5% in May following 8.3% in April for the second straight rise.
• The cash JGB curve has posted a mild twist-steepening, pivoting at the 7s, with yields 0.5bps lower to 2bps higher. The benchmark 10-year yield is 0.5bp higher at 0.947% versus the cycle high of 1.101%.
• The swaps curve has bear-steepened, with rates flat to 2bps higher. Swap spreads are mostly wider.