Futures Extend Morning Weakness, BoJ Dep Gov Uchida Comments On YCC

In the Tokyo afternoon session, JGB futures continued to weaken, down by 33 compared to settlement levels. This trend aligns with the results of this morning's BoJ Rinban operations, which showed higher and positive spreads, and generally higher cover ratios.

• In addition to the previously outlined monetary base data and the BoJ Minutes from the June MPM, the key domestic news were comments from BoJ Deputy Governor Shinichi Uchida who said that the BoJ is far from an exit or raising its negative interest rate. “Needless to say, we do not have an exit from monetary easing in mind,” Uchida said in a speech to local business leaders. “In sum, the bank’s decision to conduct yield curve control with greater flexibility aims at patiently continuing with monetary easing.” (See link)
• The cash JGB curve has bear steepened with yield changes from +0.5bp to +2.6bp. The benchmark 10-year yield is +2.4bp at 0.631%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• Swap rates see an almost uniform 1-2bp shift higher across the curve. Swap spreads are wider out to the 5-year and tighter beyond.
• Tomorrow the local calendar sees International Investment Flow and Jibun Bank Services and Composite PMIs data, along with 10-year Inflation Linked supply.