Cash Bond Bull Flattener, Light Local Calendar Tomorrow

JGB futures are holding slightly negative, -9 compared to settlement levels, after dealing in a narrow range in today’s Tokyo session.

• Outside of the previously outlined PPI Services data, there hasn't been much in the way of domestic drivers to flag.
• The BoJ is likely to raise interest rates to 0.5% in December from 0.25% amid improvements in inflation-adjusted wages, Okasan Securities economist Ko Nakayama says in a research note. (as per DJ)
• "If the Bank of Japan is becoming more confident about the virtuous cycle of prices and wages, it is likely to raise policy interest rates by 25 basis points every six months, while paying attention to the impact on the markets."
• Cash US tsys are little changed in today’s Asia-Pac session after being slightly richer earlier.
• The cash JGB curve has bull-flattened, with yields flat to 2bps lower. The benchmark 10-year yield is 0.5bps lower at 0.887% versus the cycle high of 1.108%.
• Later today will see an Enhanced-Liquidity Auction for 15.5-39-year OTR JGBs.
• Swap rates are flat to 1bp higher. Swap spreads are wider.
• Tomorrow, the local calendar is empty apart from BoJ Rinban Operations covering 3-25-year+ and Inflation-Indexed JGBs.