Futures Downtick at Lunch, BoJ Ueda In Parliament

At the Tokyo lunch break, JGB futures have unwound overnight strength to be -2 compared to the settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined weekly International Investment Flows data. Later today, the local calendar sees the Tertiary Industry Index and an Enhanced-Liquidity Auction for OTR 15.5-39-year JGBs.
• BoJ Governor Ueda has just started speaking in Parliament. He has stated that it is “important to maintain the health of the BoJ’s finances”. Ueda added that the BoJ would mull if negative rates need to be kept once the price goal is in sight and that “easy financial conditions are likely to stay even if negative rates end”.
• Cash US tsys are dealing ~2bps cheaper in today’s Asia-Pac session after Atlanta Federal Reserve President Raphael Bostic said after market that he is still not thoroughly convinced inflation is on track to the central bank's 2% target and will need to see continuing evidence of ebbing prices pressures to build greater confidence: MNI
• Cash JGBs are slightly mixed, with yield movements across the curve bounded by +/- 1bp. The benchmark 10-year yield is 0.4bp higher at 0.735% versus the Nov-Dec rally low of 0.555%.
• The swaps curve has bear-steepened, with rates flat to 2bps higher. Swap spreads are mixed.