Futures Slightly Lower At Lunch, BoJ’s April Minutes Discussed FX-Induced Action

At the Tokyo lunch break, JGB futures are slightly lower, -4 compared to the settlement levels.

• Outside of the previously outlined April BoJ Meeting Minutes and Trade data, there hasn't been much in the way of domestic drivers to flag.
• (MNI, ICYMI) Some Bank of Japan board members saw the possibility that developments of foreign exchange rates could warrant monetary policy action at the April 25-26 policy meeting, despite forex rates not subject to direct control by monetary policy, the meeting minutes showed on Wednesday.
• “Many members pointed out that the Bank would adjust the degree of monetary accommodation as underlying inflation rose, but that, given the outlook for economic activity and prices, accommodative financial conditions would be maintained for the time being,” the minutes also showed.
• “One member expressed the recognition that it was necessary to deepen discussion on the timing and degree of policy interest rate hikes,” the minutes stated.
• US markets are shut today for the Juneteenth holiday.
• The cash JGB curve has posted a mild twist-steepening, pivoting at the 7s, with yields 1bp lower to 2bps higher. The benchmark 10-year yield is 0.7bp higher at 0.949% versus the cycle high of 1.101%.
• The swaps curve has bear-steepened, with rates flat to 2bps higher. Swap spreads are mostly wider.