Futures Outperform Global Peers Overnight, BoJ on Deck

JGB futures were a little more resilient than their global counterparts in overnight dealing, finishing at unchanged levels vs. Tokyo settlement, but this came after some notable Tokyo pressure on the back of the latest BoJ rumours that we documented on Monday. The proximity of 10-Year JGB yields to the upper limit of the BoJ’s YCC settings likely limited the move in futures overnight, although moves in core global FI markets could result in the BoJ’s will being tested further in Tokyo hours.

• Fiscal headlines have dominated local news wires overnight.
• A Nikkei source report noted that the Japanese budget will likely hit a record Y114tn in the next FY (which would equate to an eleventh consecutive record year), accompanied by Y35tn of JGB issuance.
• A separate report, from Yomiuri, pointed to Japan considering the issuance of Y500bn of green transformation economic transition bonds.
• The latest BoJ decision headlines the broader Asia-Pac docket on Tuesday. No changes are expected come the end of that meeting and you can find or full preview of that event here.