Cash Bonds Mostly Richer Ahead Of BoJ Policy Decision Tomorrow

JGB futures are stronger and near session highs, +19 compared to the settlement levels, ahead of tomorrow’s BoJ Policy Decision.

• Outside of the previously outlined mixed labour market data, there hasn't been much in the way of domestic drivers to flag.
• Cash JGBs are mixed across benchmarks, with yields 1-2bps lower out to the 10-year and flat beyond. The benchmark 10-year yield is 1.6bps lower at 1.010% versus the cycle high of 1.108%.
• The swaps curve has twist-steepened, pivoting at the 20s, with rates 2bps lower to 0.5bp higher.
• Tomorrow, the local calendar will see the BoJ Policy Meeting, with markets keenly observing any steps the central bank may take towards monetary policy normalisation.
• The BoJ is anticipated to unveil a detailed plan for reducing the pace of its bond purchases over time.
• Regarding policy rate settings, we anticipate the BoJ will maintain its target for the overnight uncollateralized call rate, consistent with consensus. That said, it appears to be a close call.
• See MNI BoJ Preview here.
• Ahead of the BoJ Decision tomorrow, the local calendar will see Retail Sales and Industrial Production data.