Futures Oscillate Around Neutral Overnight, Post-BoJ Shakeout Eyed

JGB futures meandered through overnight trade after backing away from BoJ-inspired highs into the Tokyo close, finishing post-Tokyo dealing -8. 10-Year JGB yields finished Wednesday trade around the 0.46% mark, after showing below 0.40% in the wake of yesterday’s BoJ decision.

• Note that BoJ Governor Kuroda’s press conference reaffirmed his faith and commitment to the current YCC settings, while highlighting the desire to foster meaningful wage growth. Kuroda also noted that he could not rule out the possibility of negative interest rates being applied to its funding operations, after many flagged yesterday’s subtle tweak to the parameters surrounding those operations as a stronger backstop to defend the Bank’s YCC settings.
• On the wage front the latest RTRS survey revealed that “more than half of Japanese companies are planning to raise wages this year” with ”24% of the companies polled said they planned on across-the-board bumps in base salary along with regularly scheduled wage increases. Another 29% said they would carry out regular pay increases only, while 38% were undecided.”
• Looking ahead, the continued shakeout from yesterday’s BoJ decision will dominate maters on Thursday, with some of the most bearish JGB market participants maintaining their stance post-decision.
• Today’s local docket includes trade balance data, weekly international security flow metrics and 20-Year JGB supply.