Futures In Positive Territory In Early Tokyo Trade, Rinban Operation For 3-25Y+ Due

In Tokyo morning trade, JGB futures have pushed into positive territory, +5 compared to settlement levels, after the release of the BOJ Minutes for the July Meeting.

• Bloomberg reports that BOJ board members saw the need to enhance flexibility in the bank’s yield curve control program in order to nimbly respond to upside and downside risks, and stable market conditions allowed them to act, according to minutes of the July policy meeting published Wednesday. Many members said hitting the BOJ’s inflation target is not yet in sight. One member said the goal seems clearly in sight and around January through March 2024, it might be possible to assess whether the Bank would achieve the target. (See link)
• Later today the calendar sees Leading and Coincident Indices, and Machine Orders.
• The cash JGB curve has twist-flattened, pivoting at the 3s, with yields 0.1bp higher to 0.7bp lower. The benchmark 10-year yield is 0.2bp lower at 0.739%, above BOJ's YCC soft limit of 0.50% but below its hard limit of 1.0%. It is also lower than the cycle high of 0.756%, set prior to the BOJ decision.
• Swap rates are lower out to the 5-year and higher beyond. Swap spreads are generally slightly wider.