Futures Nudge Higher Overnight

10-Year JGB futures registered modest gains in overnight dealing, adding 10 ticks in post-Tokyo trade after unwinding an early downtick.

• Note that the heavily awaited BoJ Tamura-Takata press conference, which was only announced by the BoJ earlier on Monday, revealed general support for existing BoJ policy, with Takata pointing to an ability to maintain JGB market functioning alongside the current policy settings (including YCC), with the latter required owing to the need for support for the economy. A reminder that Takata replaced the dovish dissenter Kataoka on the board, and there was some speculation that he could present a more hawkish view owing to concerns re: market functioning. These fears seemed to have been quashed at the earliest opportunity. A quick reminder that out policy team’s latest insight piece suggested that the two new BoJ board members would support the status quo in policy settings through the end of Governor Kuroda’s existing term (which finishes in April ’23).
• Takata did indicate a willingness to move between hawkish and dovish stances depending on the economic situation.
• Meanwhile, Tamura seemed keen to assess the impact of negative interest rates, much like his predecessor Suzuki.
• The outdated minutes from the BoJ’s June monetary policy decision and 40-Year JGB supply headline domestically on Tuesday.