Futures Sharply Weaker After BoJ Board Actively Discusses An Exit Policy

JGB futures are holding sharply lower, -27 compared to settlement levels, after the release of a relatively hawkish BoJ Summary Of Opinions for the January policy meeting. The session low for JBH4 has been 145.96, -48 versus settlement levels.

• (MNI) BoJ board members actively discussed an exit policy and a post-exit monetary policy at the Jan 22-23 meeting, the summary of opinions released on Wednesday showed. One BOJ board member said the conditions to terminate the negative interest rate policy are being met. While the other board members did not share the same view, some admitted conditions had elevated the probability of Japan's economy hitting the bank’s 2% price target, leaving the door open for the possible removal of the negative interest rate policy in future. (See link)
• There hasn’t been much in the way of domestic data drivers to flag, outside of the previously outlined Industrial Production and Retail Sales. Consumer Confidence and Housing Starts are due later today.
• Cash JGBs are cheaper out to the 20-year, with the 10-year underperforming. The benchmark 10-year yield is 2.5bps higher at 0.742% versus the Nov-Dec rally low of 0.555%.
• Swaps are also cheaper, with swap spreads tighter out to the 20-year and wider beyond.
• Tomorrow, the local calendar sees Weekly International Investment Flows and Jibun Bank PMI Mfg data, along with 10-year supply.