Firmer Bias, But Limited US Tsy Upside Curbs Gains

JGB futures have mostly traded with a positive bias in the first part of Monday trade. We were last at 145.60, +.19. Session highs came in at 145.70, while lows were at 145.42.

• The general tone in global yields through the latter stages of last week was to soften after some dovish shifts from EU central banks. This has spilled over to JGBs to some degree.
• US Tsy futures are off earlier highs (TYM 4 last at 110.25), which has likely kept JGB futures from extending higher. We do have more US Fed speak later on Monday.
• The BoJ mins for the Jan meeting came and went without much market reaction. They have obviously been superseded by last week's shift away from NIPR. The mins stated if there was a delay in exiting NIPR it could mean more aggressive rate hikes later, while financial conditions were expected to remain accommodative even when such a move was made.
• We also had a step up in FX rhetoric from FX chief Kanda earlier, but yen couldn't break higher.
• In the cash JGB yield space, most yield weakness is evident in the belly of the curve, with 7 and 10yr yields off around 1bps respectively. The 2 yr yield is holding above 0.20% at this stage. In the swaps space, the 10yr is down slightly, last near 0.86%.
• Looking ahead, tomorrow has the PPI and machine tool orders. On Wed we have BoJ board speak (Tamura), along with a 40yr debt sale.