JGBS: Futures Holding Stronger, BoJ SOO: Raise Rates Cautiously

At the Tokyo lunch break, JGB futures are holding in positive territory, +7 compared to settlement levels.

• Several Bank of Japan board members emphasised the need to consider raising the policy interest rate cautiously amid unstable markets and uncertainty over the U.S. economy at the Sept 19-20 meeting, the summary of opinions showed on Tuesday.
• “When conducting further policy interest rate hikes, the bank will need to communicate its policy stance and other factors to markets more carefully,” one of nine policy board members said.
• The Bank of Japan's closely watched five-year Japanese firm inflation expectations, in addition to the one- and three year view, held above 2% over Q3, the BOJ September Tankan survey released on Tuesday showed, supporting the central bank’s view that the country's ingrained deflationary mindset is shifting.
• Cash US tsys are flat to 1bp richer in today’s Asia-Pac session after yesterday’s Powell-induced sell-off.
• The cash JGB curve continues to hold a twist-flattening, pivoting at the 2-year, with yields 4bps higher to 3bps lower. The benchmark 10-year yield is 0.3bps lower at 0.858% versus the cycle high of 1.108%.
• Swap rates are 2bps lower to 3bps higher, with a steepening bias. Swap spreads are tighter out to the 10-year and mixed beyond.