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JGBs Advance Amid Yen Volatility, Risk Aversion; BoJ Policy Review Eyed


JGB futures started on a firmer footing, rising to 147.90 on the initial upswing, amid heightened JPY volatility. Another round of purchases emerged as broader risk sentiment soured on the back of weakness in Chinese equity space, with participants digesting the outcome of Chinese Communist Party's congress and a mixed bag provided by delayed Chinese activity data.

  • JBZ2 last trades at 147.96, up 37 ticks from the prior settlement, printing new session highs. Cash JGB yields are mostly lower, save for 3s & 20s, with 7s leading gains. The yield on 10-Year JGBs tested the 0.25% cap imposed by the BoJ as part of its YCC framework.
  • Reminder that Japan's central bank will hold a monetary policy meeting this Friday. The Policy Board has been adamant to stick with its super-dovish stance, even as the market keep putting it to a test. It is expected that the BoJ will keep the main parameters of its policy unchanged this week, remaining the last dovish holdout among major central banks.
  • A round of flash Jibun Bank PMI readings caused little stir.

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