JGB futures edged higher overnight, sticking...>

JGBS: JGB futures edged higher overnight, sticking within the Tokyo range after

the curve twist steepened on Tuesday. 20-Year supply & monthly trade balance

data headline the local docket today, but focus is on tomorrow's BoJ decision.

- Our latest insight piece noted that the BoJ is divided over the degree that it

should tolerate lower JGB yields, but there seems to be little sense of an

urgent need to take action to reverse recent mkt moves. Although, there is a

concern that renewed strength in the super-long sector will distort the yield

curve. Elsewhere, former BoJ Dep Gov Hirohide Yamaguchi emphasised the +ve

benefits to both the econ & fin'l markets if the BoJ doesn't conduct further

easing but noted that there is the possibility that the central bank cuts its

short-term interest rate further into -ve territory, following easing by the ECB

& and possibly the Fed. Yamaguchi didn't comment directly on the outcome of the

BoJ's two-day policy-setting meeting that starts today, but he said that the

hurdle to further easing is high. The latest BBG source report noted that BoJ

officials think lowering the negative interest rate, if they chose to do so in

the coming months, wouldn't backfire as investors are aware of the possibility.