Futures Strengthen On BoJ Dep Gov Dovish Comments

At the Tokyo lunch break, JGB futures are stronger and close to session highs, +20 compared to the settlement levels, after dovish comments from BoJ Deputy Governor Uchida.

• He noted that the central bank needed to keep easing for the time being (a likely reference to keeping accommodative financial conditions). He added that rates won't be raised if the market is unstable and the rate path will shift if market moves affect the economic outlook (per BBG).
• According to MNI’s technicals team, JGB futures continue to trade in a volatile manner. The latest sharp rally has confirmed a bullish reversal and in the process cleared a number of important resistance points. A continuation higher would pave the way for a climb towards 147.74, the Jan 15 high and a bull trigger.
• Cash US tsys are 1-4bps cheaper in today’s Asia-Pac session, after yesterday’s sharp sell-off.
• The cash JGB curve twist-steepened, pivoting at the 7s, with yields 3bps lower to 3bps higher. The benchmark 10-year yield is flat higher at 0.901%, near the middle of the 0.74-1.10% range it has traded in over the past week.
• Swap rates are mostly lower apart from the 20-year zone, which sees a 2bp rise.
• Today, the local calendar will see Leading and Coincident Indices later.