Futures Uptick In Overnight Dealings Ahead Of The Weekend, BoJ Policy Decision Tomorrow

In post-Tokyo trade ahead of the weekend, JGB futures up ticked, closing +6 compared to settlement levels, after US tsys finished 5bps cheaper to 3bps richer across the major benchmarks. The curve twist flattened, pivoting on 10s.

• The short end of the curve was pressured on Friday as NY President Williams noted that the FOMC isn't thinking about rate cuts right now and it is premature to think about the timing of easing.
• US tsys did remain well within recent ranges as Williams' comments were not too far from what Fed Chair Powell had said on Wednesday. The space mostly looked through the S&P Global flash PMIs.
• FOMC dated OIS price a terminal rate of 5.30% with ~1.20% of cuts by November 2024.
• Today, the local calendar is empty, ahead of the BoJ policy decision tomorrow. While certain investors interpreted recent statements from BoJ officials regarding exit scenarios as a sign of an imminent shift away from yield curve control, we are inclined to view it as a strategic step in the extended process of preparing for a seamless transition, likely occurring around mid-year next year.
• The BoJ also conducts Rinban operations covering 1- to 25-year JGBs.