Futures Sharply Weaker, A New Post-YCC Tweak Yield High For 10Y

During morning trade in Tokyo, JGB futures have experienced a significant decline, dropping by 52 in comparison to their settlement levels. This comes after they closed at -14 in overnight trading leading up to the weekend. The market is currently absorbing the impact of remarks made by BoJ Governor Ueda over the weekend.

• BoJ Governor Kazuo Ueda said it’s possible the central bank will have enough information and data by the year-end to judge if wages will continue to rise, a condition for adjusting stimulus, according to an interview with the Yomiuri newspaper. Ueda said the central bank is still some distance away from achieving its price stability target and would continue its patient monetary easing. If the BOJ becomes confident prices and wages will keep going up sustainably, ending its negative interest rate is among the options available, Ueda said in the interview published Saturday. (See link ICYMI)
• JGB benchmark yields have climbed to their highest levels since 2014 amid speculation that the central bank is preparing to end its negative rate policy. Cash JGBs are sharply higher, with yields 1.2bp to 4.4bp higher. The benchmark 10-year yield is 4.4bp at 0.70%, a post-YCC tweak high.
• The swap curve has bear-steepened, with rates 3.0bp to 4.9bp higher. Swap spreads are wider.