JGBs edged lower in the morning, paying........>

JGBS: JGBs edged lower in the morning, paying attention to the RTRS source piece

released after the close on Monday which noted that interviews with 12 people

familiar with the BOJ's thinking reveal for "the first time that there were

plans to raise rates twice this year. In January, market turbulence pulled the

rug from under an announcement of an increase. The bank then hoped to signal

higher rates in Jul & raise them in Sep, but weak inflation data scuttled that

idea too." "The latest steps marked a major turning point for Kuroda's stimulus

program," a source said. "The reflationists have become a minority, which means

the BOJ is turning more hawkish." One of the sources also notes that "it's

unclear what the BOJ really wants to do. It's doubtful how much the latest moves

would help banks. The only thing clear is that with a dearth of policy tools,

the BOJ is in a deadlock." The belly to longer end of the curve reversed much of

its underperformance in the afternoon, with breakevens making new lows after the

latest 10-Year JGBi auction before they recovered. Monday's session low held in

JGB futures.

- Eyes on summary of opinions from the BOJ's Jul MonPol decision, due tomorrow.