Cash Firms, Futures Back To Flat

JGB futures hugged a tight range during the Tokyo morning, with the contract operating at yesterday’s settlement levels at the lunch break. Wider cash JGB trade sees the early richening move hold/extending, with the curve flattening as the major benchmarks sit 1-6bp richer. Swaps rates are still only 0.2-0.7bp lower, meaning swap spreads are wider across the curve.

• Newly installed BoJ Deputy Governor Uchida has flagged the need to assess trend inflation through the medium of various indicators, while highlighting the importance of communication with financial market participants, albeit playing down the need to communicate policy outcomes ahead of BoJ meetings (echoing incoming Governor Ueda). Uchida also chose not to rule out any specific policy moves, pointing to a willingness to act as is necessary.
• There was nothing new from outgoing BoJ Governor Kuroda in his latest parliamentary address, as he reaffirmed the idea that all policy choices have benefits and costs, with the benefits of the Bank’s ultra-loose policy settings exceeding the costs, in his view. Kuroda reaffirmed the need for continued monetary easing, alongside a requirement to assess inflation dynamics in a comprehensive manner.
• Elsewhere, Finance Minister Suzuki has stressed that BoJ dialogue with market participants is important, while underscoring the need for fiscal discipline.
• Recently released cover ratios re: today’s 3- to 25-Year BoJ Rinban operations were subdued.
• BoJ Deputy Governor Himino will appear in front of parliament later today.