JGBS: Futures Off Session Bests

JGB futures are off best levels at the lunch break, sitting at +4, after backing away from early session bests (drivers for the Tokyo morning uptick were flagged earlier).

• There wasn't much in the way of domestic drivers to flag, outside of the previously outlined JiJi sources piece re: BoJ inflation projections.
• BoJ Governor Ueda went over old ground re: BoJ JGB purchases, playing down desires to finance government spending.
• Meanwhile, BoJ Deputy Governor Uchida said that central banks can always secure profits by issuing sovereign currencies but noted that it was important to pay attention to sovereign fiscal health.
• The JGB cash 2/10 curve has twist flattened with the 2-year 0.2bp cheaper and 10-year 0.4bp richer. The benchmark 10-year yield is at 0.481%, just below the BoJ's YCC limit of 0.50%.
• Swap spreads are marginally tighter across most of the curve.
• Early afternoon focus turns to the liquidity enhancement auction for off-the-the-run 5- to 15.5-year JGBs.