Futures Pare Overnight Losses, BoJ Nakagawa Speech Due

In Tokyo morning trade, JGB futures have pared overnight losses, -4 compared to settlement levels.

• With the local calendar empty today, local participants are likely on headlines and US tsys watch. US tsys have re-opened dealing ~1bp richer across the major benchmarks. Asia-Pac participants have faded Tuesday's cheapening, perhaps focusing on Gov Waller's Fedspeak or using the opportunity to close out short positions/add fresh longs.
• Bloomberg reports that Japan’s FX warning early on Wednesday is drawing attention to a possible yen intervention but the bigger risk is a possible end to the BoJ’s negative rate policy. Japan’s 10-year note yield is more than 30 bps below the BoJ’s new 1% ceiling, meaning a further increase in the limit would have almost no effect on yields. This in turn raises the risk that the BoJ may opt to end its negative-rate policy on Sept. 22. (See link)
• Speech from BoJ Board Member Nakagawa is due at 0230 BST / 1030 local time.
• Cash JGBs are mixed, with the 7-20-year zone underperforming. The benchmark 10-year yield is 0.3bp higher at 0.661%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• The swaps curve has twist flattened, pivoting at the 7s, with rates 0.1bp higher to 0.4bp lower. Swap spreads are tighter.