Futures Are Stronger And At Session Highs, 30Y Supply Tomorrow

JGB futures are close to session highs, +5 compared to settlement levels, after spending most of the morning session in slightly negative territory.

• With the local data calendar empty today, local participants were likely focused on a speech by BoJ Board Member Takata. In the speech, he said that large-scale monetary easing must be kept in place amid extremely high uncertainties. Adding that it’s also necessary to take action nimbly to prepare for uncertainties by considering inflation and economic conditions. (See linkICYMI)
• Outside the speech, local participants have likely been guided by US tsys. US tsys are dealing at Asia-Pac session bests, 1-2bp richer.
• Cash JGBs are mixed across the curve, with yields 0.5bp higher (1-year) to 1.6bp lower (40-year). The benchmark 10-year yield is 0.1bp lower at 0.657%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• The swaps curve has bull flattened, with rates 0.1bp to 1.5bp lower. Swap spreads are tighter, out to the 30-year.
• Tomorrow the local calendar sees International Investment Flows, along with a speech from BoJ Board Member Nakagawa.
• Tomorrow the MoF plans to sell Y900mn of 30-year JGBs.