Futures Add To Overnight Gains After April BoJ Minutes Release

JGB futures add to overnight strength in early Tokyo trading to be at 148.66, +13 versus settlement levels, after the release of the BoJ Minutes for the April meeting. In terms of Minutes highlights:

• A few members pointed out that past price increases in commodities and raw materials continued to be passed on to consumer prices with a time lag.
• One member expressed the view that, with labor shortages intensifying, high wage increases could be expected in 2024.
• One member said signs of a virtuous cycle between prices and wages had started to be observed.
• A few members said in order for CPI inflation to rise again toward 2% after decelerating, it was necessary for wage developments, firms' growth expectations, and medium- to long-term inflation expectations to improve.
• Some members said it was appropriate for the bank to continue with the current monetary easing due to the difficulty of assessing the sustainability of future wage hikes, and developments in inflation expectations.
• BoJ Board Member Adachi will give a speech at 0230 BST.
• The cash JGBs curve bull flattens with the futures linked 7-year zone (-1.4bp lower) leading. The benchmark 10-year yield is 1.0bp lower at 0.384%, below the BoJ's YCC limit of 0.50%.
• Swap spreads are generally wider across the curve.