Firmer On Local COVID & BoJ Matters

JGB futures oscillated around the closing levels posted at the end of the pre-holiday overnight session, finishing +17, with the 5-10 Year zone of the curve outperforming, firming by ~2.0bp, while the super-long end lagged.

• Economy Minister Nishimura stressed that it is necessary for the state of emergency to be maintained across 10 areas of Japan, as was flagged in recent days. Elsewhere, Finance Minister Aso reiterated the broader policymaker view re: the Japanese economy.
• The broader firming was also aided by several recent press reports which suggested that the BoJ's monetary policy review will note that the Bank has space to cut interest rates further into negative territory, if required. This message is not new, although there may be a slight tweak in the language employed, which could be part of a balancing act as the BoJ looks set to promote broader flexibility re: monetary policy matters to elongate the sustainability of ultra-loose monetary conditions.