Futures Hold The Bulk Of Their BoJ Sources-Related Gains

JGB futures operate the best part of 30 ticks off their overnight session high, although still sit ~65 ticks above Tokyo settlement levels in light of the well-documented RTRS & BBG source reports that played down the prospect of a BoJ YCC tweak come the end of next week’s monetary policy meeting.

• 10-Year swap spread dynamics also pointed to a clear reduction in hawkish speculation, with that spread on track to close at the tightest level since August ’22.
• A quick reminder that this week’s rhetoric from BoJ Governor Ueda had already seen hawkish expectations moderate, with a RTRS poll released before the aforementioned sources pieces crossed noting that “the Bank of Japan will hold steady its policy including its yield control scheme at next week's meeting, more than three-quarters of economists polled by Reuters said.”
• JGB futures operate comfortably off the multi-month low registered last week, with the latest bid in wider core global FI markets helping underpin the contract after the move back from best levels.