Futures Spike Higher In The Tokyo Afternoon Session After the BOJ Leaves Policy Unchanged

JGB futures have spiked higher at the open of the Tokyo afternoon session, +16 compared to settlement levels after the BOJ board members decided to leave their current monetary policy settings unadjusted, maintaining rates and 10yr JGB yield target at -10bps and 0.00% respectively.

• The BOJ offered no clear sign of a shift in its policy stance, putting a damper on market speculation over the prospects for a near-term interest rate hike and fuelling pressure on the yen. The lack of major changes to the central bank’s policy statement suggests Governor Kazuo Ueda is likely to strike a neutral tone to keep his options open while trying to avoid any further downward pressure on the currency when he holds a press briefing later today. (See link)
• The cash JGB curve has twist flattened, pivoting at the 4s, with yields 0.8bp higher to 1.1bp lower. The benchmark 10-year yield is 0.7bp lower at 0.736% after hitting a fresh post-YCC tweak high of 0.756% today.
• Swap rates are lower across the curve, with pricing 0.2bp to 2.4bp lower. Swap spreads are tighter across maturities.