Futures Pare Morning Weakness Ahead Of BoJ Decision

At the Tokyo lunch break ahead of today’s BoJ policy decision, JGB futures have pared morning weakness to be 147.72, -69 compared to the settlement levels. The Tokyo morning session low was 147.22.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Tokyo CPI that surprised on the upside for headline, core and core-core measures. JGBs appear to have been pressured by Tokyo CPI data. (See link ICYMI)
• Cash JGBs are 0.4bp to 6.0bp cheaper with the futures-linked 7-year zone leading. The benchmark 10-year yield is 5.3bp higher at 0.503%, above BoJ's YCC limit of 0.50%.
• The swap curve has bear steepened with rates 0.8bp to 6.1bp higher. Swap spreads are wider apart from the 7-year.