Futures Back To Overnight Highs After Unscheduled Bond Purchase By The BOJ

At the Tokyo lunch break, JGB futures rebounded to reach overnight highs, marking a gain of +17 points compared to the settlement levels following the BOJ's unscheduled bond purchase. The BOJ disclosed its plans to purchase ¥300 billion worth of 5-to-10-year bonds and ¥100 billion of 10-to-25-year securities at market prices. Initially, upon the release of this news, yields across the benchmark bonds saw a brief 1bp decline. However, they have since retraced to their levels before the announcement.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Jibun Bank PMI data. September Department store sales are due later today.
• US tsys have firmed from session lows in recent dealing after the move lower didn't follow through. The recovery has come alongside a paring of gains for oil and the USD ticking lower. This leaves cash tsys 1bp cheaper to 1bp richer, with the curve twist-flattening, pivoting on 7s. TYZ3 deals at 106-14, -0-01+.
• Cash JGBs are mixed, with yield changes bounded by +/-1.5bps. The benchmark 10-year yield is 0.4bp lower at 0.873%, above BOJ's YCC soft limit of 0.50% but below its hard limit of 1.0%. It is also lower than the cycle high of 0.882% set yesterday.
• Swap rates are slightly lower across all maturities, with swap spreads mixed.