Futures Off Best Levels, Long End Firms

JGB futures have unwound their post-FOMC bid, with the contract dealing +18 at the lunch break. We would suggest that the presence of this afternoon’s 10-Year JGB supply may have applied some pressure to the contract. Wider cash JGB trade sees the major benchmarks running little changed to 5bp richer, with the curve bull flattening as domestic participants latch on to the post-FOMC bid in wider core global FI, at least in the longer end of the curve. Swap spreads are flat to wider across the curve, with swaps lagging the move in the 10+-Year zone.

• Comments from soon to be departing BoJ Deputy Governor Wakatabe reaffirmed the need for continued easing, while he also pushed back against the idea of a more ambiguous inflation target ahead of a potential tweak to the BoJ-government accord on inflation. Wakatabe also highlighted the importance of this year’s Shunto wage negotiations re: wage dynamics & feed through into inflation.