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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.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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