Futures Lower On Latest BoJ Speculation

JGB futures move further away from overnight session highs as BBG sources suggest that “the Bank of Japan are said to be mulling a reduction in bond buys as early as the June 14th meeting.” The piece goes on to note that the Bank “are said to be watching markets until the last moment before deciding, with the Bank having no intention to surprise bond traders.”

• This isn’t a new idea. MNI's Tokyo policy team has previously reported that Bank officials see the need to clarify the pace of lowering JGB buying to pave the way for market players to factor in future reductions smoothly.
• The fact that this idea has already been relatively widely discussed, with purchase reductions becoming the base case for several sell-side names in the process, probably limits the scope of the move that came alongside the Bloomberg headlines.
• Still, growing newswire speculation will add greater weight to the idea.
• JGB futures have given back early overnight gains (and a little more) last trading -4 at 143.47 vs. reaction lows of 143.37,