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Futures Bid As BoJ Stands Pat; 10-Year JGBs Back Away From Yield Cap


JGB futures are +50 ticks at 148.81 last, off best levels, but maintaining the bulk of their post-BoJ bid after the Bank chose to keep its monetary policy settings unchanged (as widely expected).

  • Cash JGBs run 0.5-3.5bp richer across the curve, with 7s leading the way higher.
  • 10-Year JGBs are ~2.0bp richer, backing away from the BoJ’s 0.25% yield cap after the week’s first trade in cash 10s was reported following the BoJ’s monetary policy decision.
  • The BoJ also conducted an unscheduled round of fixed rate operations after the Tokyo lunch break, pointing to further resolve in maintaining their current YCC settings.
  • While the BoJ’s major policy settings were unchanged, a phasing out of the COVID funding programme for SMEs (against wider expectations for a complete halt this month) provided a surprise, suggesting worry re: lingering economic weakness.
  • The BoJ decision & fresh jawboning from Japanese officials resulted in some yen volatility with little by way of a meaningful reaction in JGBs observed, and USD/JPY hovering just below the Y145.00 mark at typing, after a brief show above.
  • Japanese markets are closed for a holiday on Friday.

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