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Futures At Session Lows At Lunch, Bear-Steepener

JGBS

JGB futures have cheapened through the morning session to be close to session lows at lunch, -21 compared to the settlement levels.

  • There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Tankan Survey.
  • (Bloomberg) -- The Bank of Japan will probably take its time before raising interest rates again, with October likely being the earliest it might move next, according to a former BOJ official renowned as one of the nation’s leading inflation experts.
  • “I don’t think the next move will come so soon,” Tsutomu Watanabe, the former official and an economics professor at the University of Tokyo, said Friday. “The BOJ is likely to adjust policy by looking at data and won’t act irrationally.” (See link)
  • The cash JGB curve has bear-steepened, with yields flat (2-year) to 3.0bps higher (20-year). The benchmark 10-year yield is 1.7bps higher at 0.744% versus the YTD high of 0.801%.
  • The swaps curve has also bear-steepened, with rates flat to 2bps higher. Swap spreads are mixed but wider beyond the 4-year.

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