Futures Weaker In Pre-Weekend Overnight Dealings Ahead Of BOJ Decision Tomorrow

In post-Tokyo trade on Friday, JGB futures were weaker, closing -8 compared to settlement levels, ahead of the BOJ meeting tomorrow. There is a level of uncertainty surrounding the possibility of the BOJ making further adjustments to its yield curve control.

• This week also sees policy meetings from the FOMC and BOE. Although no substantial changes in policy are anticipated at these meetings, their potential to influence the market still looms large.
• In trading ahead of the weekend, US tsys experienced a relatively subdued yet positive NY session. The 2-year yield closed down 4bps at 5.0%, while the 10-year bond finished little changed at 4.83%.
• Conversely, global equities wrapped up the week on a cautious note, marked by concerns over geopolitical tensions and a somewhat lacklustre corporate US earnings season, which collectively dampened market sentiment. The S&P500 closed 0.5% lower, pushing into correction territory as it has registered a drop of more than 10% from its recent peak.
• Rising investor risk aversion is contributing to the demand for fixed-interest exposure. The latest EPFR fund flows data revealed weekly allocations into long-dated US sovereign debt funds were the highest on record.
• Today, the local calendar also sees 2-year supply.