Flat To Firmer, Kishida Cognisant Of Market Impact When It Comes To New BoJ Governor

JGB futures are +3 into the bell, after sticking within the confines of their overnight range in what has been a limited Tokyo session. Cash JGBs are flat to 3bp richer, with a flattening impulse developing, while swap rates are little changed to 1bp lower, leaving swap spreads little changed through 5s, then wider beyond that point.

• JGBs initially looked through comments made by PM Kishida during the Tokyo lunch break, as he noted that he is considering the impact on the markets re: his choice of BoJ Governor, while flagging communication as a key trait for the successful candidate (given the normalisation task that faces them). The recognition that he is cognisant of the market impact re: the Governor choice may have supported the longer end of the curve in the afternoon.
• Elsewhere, there would have been little spill over from the results of the BoJ Rinban operations, which saw offer/cover ratios of 1.6-2.2x, remaining subdued, although the presence of the operations, coupled with a bid in U.S. Tsys, seemingly aided the bid in JGBs.
• There was also some focus on reports that pointed to Kishida teeing up a meting between the government, labour unions and businesses as his administration looks to generate meaningful wage growth.
• 10-Year JGBi supply is due tomorrow, with the latest preliminary machine tool orders, money supply and international security flow data also slated.