Early Richening Moderates, Swap Rates Higher, BoJ Eyed

Cash JGBs hit the lunch bell little changed to 1.5bp richer across the curve, while JGB futures are +3, with the space holding a light richening bias into today’s BoJ decision. We noted earlier that domestic participants are probably a little less worried than their international counterparts re: the potential for a hawkish tweak in rhetoric at today’s monetary policy meeting (no changes in policy settings are expected, but hawkish background noises have grown louder in recent weeks, particularly via source reports). However, this idea isn’t quite that clear cut, as it would seem that payside swap flow limited the richening, with swap rates flat to a little higher across the curve, resulting in some swap spread widening pre-BoJ (swaps are free from the confines of BoJ YCC).