Futures Higher Overnight, BoJ Reaffirms YCC Conviction

JGB futures added 21 ticks in overnight dealing, aided by the BoJ noting that it will offer to buy an unlimited amount of 10-Year JGBs on every business day through 26 April owing to the current level of 10-Year JGB yields, with the wider bid in core global FI markets adding to the bid as we moved through post-Tokyo dealing. The Bank has also noted that it may increase the size of the Rinban operations scheduled for April 26, while it also introduced the idea of adding to the current Rinban operation schedule in the April 21-26 window (note that during that window, Rinban ops are only scheduled for April 26 at present).

• This comes after 10-Year yields were pinned to the upper limit of the BoJ’s -/+0.25% trading band on Wednesday, even as the BoJ conducted fixed rate operations.
• Elsewhere, commentary from the IMF has pointed to JPY’s recent decline being driven by fundamentals, with a senior Fund official pointing to the need for the BoJ to continue with its ultra-loose policy settings.
• A liquidity enhancement auction for off-the-run 15.5- to 39-Year JGBs headlines the domestic docket today, with the BoJ YCC dynamic also eyed.