Cheaper, US Tsys Pare Yesterday’s Rally In Today’s Asia-Pac Session

In Tokyo morning trade, JGB futures are cheaper, -25 compared to settlement levels, despite overnight strength in US tsys. That said, cash US tsys have opened in today's Asia-Pac session, with benchmarks 2-3bps cheaper.

• Some investors saw recent comments by Bank of Japan officials, broaching the topic of exit scenarios, as a signal of an imminent move away from yield curve control. This is likely a mistake, according to Bloomberg Economics. (See link)
• Flash December Jibun Bank PMIs: Mfg PMI 47.7 vs 48.3 prior, Services PMI 52 vs 50.8 prior and Composite PMI 50.4 vs 49.6 prior. The calendar also sees Tertiary Industry Index data later.
• Cash JGBs are mixed across benchmarks, with yield movements bounded by -0.3bp (30-year) and +2.9bps (futures linked 7-year). The benchmark 10-year yield is 2.1bps higher at 0.695%.
• Swaps are also cheaper, with swap spreads mixed.