Futures Push To Fresh Cycle Lows, Yen Under Pressure After BOJ’s Dovish YCC Tweak

In Tokyo morning trade, JGB futures are weaker, -10 compared to settlement levels, after finishing the overnight session with a 1pt uptick. At 143.65, JBZ3 is below yesterday’s low of 143.68, set before the BOJ decision, let alone the post-BOJ decision high of 144.24.

• According to MNI’s technicals team, the continuation lower confirms a resumption of the medium-term downtrend and paves the way for weakness towards 143.29, the 2.618 projection of the Mar 22 - Apr 18 - May 12 swing. On the upside, clearance of 146.41, the Sep 4 high would instead highlight a base and a possible short-term reversal.
• Jibun Bank Japan PMI Mfg (final Oct) printed 48.7 versus 48.5.
• According to Bloomberg, traders are piling into fresh bets against the yen, triggering pushback from Japanese authorities who are threatening once again to take action including the possibility of currency intervention. (See link)
• Cash JGBs are cheaper across benchmarks, with yields 1-2bps higher. The benchmark 10-year yield is 1bp higher at 0.957%, just shy of the cycle high of 0.963% (set yesterday) and BOJ’s new YCC reference level of 1.0%.
• Swap rates are 1-2bp higher across the curve, with swap spreads wider.