Early Cheapening Holds, BoJ Matters Dominate Asian Session

TYH3 deals at 114-18+, -0-07+, 0-02 away from the base of its 0-06+ range on volume of ~60K.

• Cash Tsys are dealing 0.5-3.0bp cheaper, with 10s leading the cheapening.
• Tsys were softer at the open as the reaction to a source report from Kyodo re: the possible revision to the Japanese gov’t-BoJ accord applied some moderate pressure on increased speculation re: nearer dated BoJ policy tweaks (early in the post-Kuroda era, with his term set to conclude in April) and related spill over from JGBs.
• Japanese Chief Cabinet Sec. Matsuno subsequently pushed back against the need for change in the accord allowing Tsys to tick away from session cheaps, before they re-cheapened into the London handover, with TY futures retesting their early Asia lows at one point.
• In Europe today we have a thin data calendar, save the latest IFO survey from Germany, although there will be some focus on the ECB speakers that are slated, given last week’s hawkish guidance from President Lagarde and the increased cross-market impact witnessed during ’22. European & U.S. digestion of the BoJ speculation & subsequent government denial will also factor into price action. Further out we have the latest NAHB House Market Index reading.