JGBS: Cash Bonds Slightly Cheaper, BOJ Ueda Cautious Uncertainties

JGB futures are holding stronger, +6 compared to the settlement levels, after shifting higher on 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.”
• At a press conference underway in Nagoya, Governor Ueda emphasised the importance of carefully calibrated monetary policy. Key remarks included: "Rapid hikes could be needed without the right policy steps"; "The BOJ will examine the impacts of FX on the economic outlook" and "We will assess risks at every meeting and decide on policy accordingly." These comments underscore the BOJ’s cautious approach to navigating economic uncertainties.
• Cash US tsys are slightly richer across benchmarks in today’s Asia-Pac session.
• Cash JGBs are slightly cheaper across benchmarks. The benchmark 10-year yield is 0.5bp higher at 1.078% 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.
• Tomorrow, the local calendar is empty apart from 1-year supply.