JGB Futures Surge As Wires Play Down Likelihood Of BoJ YCC Tweak, Core FI Moves More Muted

Core global FI markets quickly turned bid on the combination of the previously outlined RTRS & BBG sources pieces, which played down the likelihood of a BoJ YCC tweak at next week’s monetary policy decision. Although the moves were limited, with gilt futures quickly giving back the uptick and moving to fresh session lows, while TY & Bund futures are now around mid-range as the fresh softening in gilts limits the JGB-inspired rally there. JGB futures sit ~15 ticks off best levels after an ~85 tick spike higher on the back of the stories.

• A quick reminder that comments made by BoJ Governor Ueda on Tuesday had seemingly already watered-down expectations for any such YCC tweak to be enacted next week, leaving the 10-Year swap/JGB spread (a proxy for YCC-tweak speculation) comfortably off of recent wides (which were somewhat narrower than what was seen during recent rounds of YCC speculation), and that was before the compression in the spread that has taken place on the back of the recent headlines.