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JGBS: BOJ Gov. Ueda Slightly Downplays An Imminent Hike

JGBS
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At the Tokyo lunch break, JGB futures are once again stronger, +7 compared to the settlement levels, after dealing in negative territory for much of the morning session.

  • The turnaround came after BOJ Governor Ueda’s remarks to business leaders today. While Ueda maintained his stance that the bank will continue to raise the policy rate if the economy realises the BOJ's outlook for economic activity and prices, he slightly downplayed an imminent hike, noting the timing of adjustments "will continue to depend on developments in economic activity and prices as well as financial conditions going forward.”
  • “The Bank needs to pay due attention to various risk factors, such as those pointed out in the latest Outlook Report, including the course of overseas economies, particularly the U.S. economy, and developments in financial and capital markets,” he added.
  • Cash US tsys are 1-2bps richer across benchmarks in today’s Asia-Pac session after Friday’s bull-steepening.
  • Cash JGBs are slightly mixed across benchmarks beyond the 1-year (+3.0bps), with yields 2bps higher to 1bp lower. The benchmark 10-year yield is 0.7bp higher at 1.080% versus the cycle high of 1.108%.
  • The swaps curve has twist-steepened, pivoting at the 20-year, with rates 3bps lower to 1bp higher. Swap spreads are tighter out to the 10-year.
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At the Tokyo lunch break, JGB futures are once again stronger, +7 compared to the settlement levels, after dealing in negative territory for much of the morning session.

  • The turnaround came after BOJ Governor Ueda’s remarks to business leaders today. While Ueda maintained his stance that the bank will continue to raise the policy rate if the economy realises the BOJ's outlook for economic activity and prices, he slightly downplayed an imminent hike, noting the timing of adjustments "will continue to depend on developments in economic activity and prices as well as financial conditions going forward.”
  • “The Bank needs to pay due attention to various risk factors, such as those pointed out in the latest Outlook Report, including the course of overseas economies, particularly the U.S. economy, and developments in financial and capital markets,” he added.
  • Cash US tsys are 1-2bps richer across benchmarks in today’s Asia-Pac session after Friday’s bull-steepening.
  • Cash JGBs are slightly mixed across benchmarks beyond the 1-year (+3.0bps), with yields 2bps higher to 1bp lower. The benchmark 10-year yield is 0.7bp higher at 1.080% versus the cycle high of 1.108%.
  • The swaps curve has twist-steepened, pivoting at the 20-year, with rates 3bps lower to 1bp higher. Swap spreads are tighter out to the 10-year.