Futures Nudge Lower Post-Powell

JGB futures shed 11 ticks in overnight trade, going out at session cheaps in lieu of Fed Chair Powell’s warning re: higher than previously envisaged interest rates and the potential for a swifter pace of tightening.

• Local headline flow remains relatively limited, with focus on Friday’s BoJ decision. A clear consensus looks for no change in BoJ policy settings come the end of outgoing Governor Kuroda’s final policy meeting. However, the Bank’s recent propensity to shock (see the surprise widening of the YCC band back in December) means that this view is held with varying degrees of conviction. There will be more on that matter in our full preview of the event.
• Reaction to Powell’s address and pre-BoJ positioning will likely drive price action in Tokyo on Wednesday, excluding the presence of any fresh headline catalysts.
• BoP data and the latest round of BoJ Rinban (covering 1- to 25-Year JGBs) headline the local docket today.