Futures Weaker, BoJ Expected To Revise Consumption & Factory Orders Down

JGB futures are holding in negative territory, -10 compared to settlement levels, after shunting lower early in the session following a report that Japan’s biggest bank saw a BoJ exit from negative rates in two weeks.

• Mitsubishi UFJ Financial Group Inc.’s view is much more definitive than the swap market, which rates the chances of BoJ Governor Kazuo Ueda changing policy this month at about 50%. When he changes course, it will have major implications for the 1,096 trillion yen government bond market and the nation’s currency. (See Bloomberg linkICYMI)
• (Bloomberg) -- The BoJ is expected to revise down its assessment of consumption and factory output this month, Reuters reports, citing 3 unidentified people familiar with its thinking.
• The local data calendar was empty today, ahead of January labor cash earnings tomorrow.
• US tsys are largely unchanged in today’s Asia-Pac session ahead of Fed Chairman Powell's semi-annual policy testimony to Congress scheduled for later today and Thursday.
• Cash JGBs are slightly cheaper, with yields flat to 1bp higher. The benchmark 10-year yield is 0.8bp higher at 0.714% versus the Nov-Dec rally low of 0.555% and the February high of 0.772%.
• Swap rates are slightly higher out to the 5-year and slightly lower beyond. Swap spreads are mixed.