Holding At Overnight Closing Levels Ahead Of BoJ Ueda’s Appearance In Parliament

In Tokyo morning trade, JGB futures are holding near overnight closing levels, -19 compared to settlement levels, ahead of BoJ Governor Ueda’s appearance in Parliament at 10:06 JT.

• This comes after comments from BoJ Deputy Governor Shinichi Uchida yesterday sparked a burst of short covering. BoJ Deputy Governor Shinichi Uchida remarked that the likelihood of the bank swiftly and continuously raising its policy rate post-negative interest rates is low. Uchida emphasised that financial conditions will remain supportive, as articulated in his address to local business leaders in Nara.
• M2 & M3 stock rose 2.4% y/y and 1.8% y/y respectively in January versus 2.3% and 1.7% prior.
• Cash JGBs are little changed, with yield movements bounded by +/- 1bp. The benchmark 10-year yield is 0.5bp higher at 0.710% versus the Nov-Dec rally low of 0.555%.
• The 5-year is 0.3bp higher at 0.315%, ahead of today’s supply. The current 5-year auction is taking place with an outright yield that is 10-15bps higher than January’s offering. It is also worth noting that January’s level was at its lowest since late July. The 2/5 curve is also around 5bps steeper than at the January auction.
• Today's auction also comes on the heels of solid results at February’s 10- and 30-year JGB supply.
• Swaps are slightly mixed. Swap spreads are also mixed.