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Futures Sitting Richer But Off Israeli Strike Highs, BoJ To Scale Back JGB Buying

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JGB futures are stronger in the Tokyo afternoon session, +22 compared to the settlement levels, but well off session highs tied to news that Israeli missiles have hit sites in Iran.

  • Cash US tsys are dealing 6-9bps richer across benchmarks, although they have retraced from the peak levels seen during the Asia-Pacific session.
  • There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined National CPI, which missed expectations.
  • (MNI) The Bank of Japan is toying with how it can lower the scale of its Japanese government bond-buying programme without injecting volatility into the rates market or sharply raising long-term yields and could potentially lower the largely ambiguous JPY6 trillion monthly level found within its March board communications to JPY5 trillion at the July 30-31 meeting. (See link)
  • The cash JGB curve bull-flattened, with yields flat to 4bps lower. The benchmark 10-year is 2.8bps lower at 0.841% versus the YTD high of 0.891% set this week.
  • The swaps curve has richened, led by the 7-10-year zone, with rates 1-5bps lower. Swap spreads are mixed.
  • The local calendar is empty on Monday, ahead of Jibun Bank PMIs and 2-year supply on Tuesday. The BoJ Policy Decision is on Friday.
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JGB futures are stronger in the Tokyo afternoon session, +22 compared to the settlement levels, but well off session highs tied to news that Israeli missiles have hit sites in Iran.

  • Cash US tsys are dealing 6-9bps richer across benchmarks, although they have retraced from the peak levels seen during the Asia-Pacific session.
  • There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined National CPI, which missed expectations.
  • (MNI) The Bank of Japan is toying with how it can lower the scale of its Japanese government bond-buying programme without injecting volatility into the rates market or sharply raising long-term yields and could potentially lower the largely ambiguous JPY6 trillion monthly level found within its March board communications to JPY5 trillion at the July 30-31 meeting. (See link)
  • The cash JGB curve bull-flattened, with yields flat to 4bps lower. The benchmark 10-year is 2.8bps lower at 0.841% versus the YTD high of 0.891% set this week.
  • The swaps curve has richened, led by the 7-10-year zone, with rates 1-5bps lower. Swap spreads are mixed.
  • The local calendar is empty on Monday, ahead of Jibun Bank PMIs and 2-year supply on Tuesday. The BoJ Policy Decision is on Friday.