Futures At Session Highs At Lunch Ahead Of 30Y Supply, BoJ Nakamura Dovish

At the Tokyo lunch break, JGB futures richer and at session highs, +22 compared to the settlement levels.

• BoJ Board Member Nakamura says it’s appropriate to maintain current monetary policy settings for the time being given recent economic data (per BBG). Japan’s economy is coming to a critical juncture, Nakamura says in a speech to local business leaders in Sapporo, northern Japan. The economy has a golden opportunity to achieve a sustainable 2% inflation target, but he is not certain about the sustainability of wage gains yet. He added, “My view is that inflation may not reach 2% from fiscal 2025 onward if consumption weakens”.
• Tokyo Avg Office Vacancies rose to 5.48% in May from 5.38% in April.
• Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session after the recent rally extended to day five yesterday following weaker-than-expected ADP Private Employment data.
• Cash JGBs are richer across benchmarks, with the futures-linked 7-year leading (3.0bps richer). The benchmark 10-year yield is 2.5bps lower at 0.993% versus the cycle high of 1.101% set late last week.
• The 30-year is 2.0bps lower at 2.171% ahead of today’s supply.
• The swaps curve has twist-steepened, pivoting at the 20s, with rates 2bps lower to 2bps higher. Swap spreads are mostly wider.