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JGBS: Richer After 10Y Supply, BoJ Noguchi Flags More Hikes

JGBS
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In early afternoon trading, JGB futures are holding a downtick, -4 compared to the settlement levels, after strengthening following a solid 10-year auction.

  • The 10-year JGB auction saw the low price beat wider expectations. Moreover, the cover ratio rose to 3.529x from 3.17x at last month’s auction and the tail shortened to 0.02 from 0.09 in September.
  • BoJ board member Asahi Noguchi said the BoJ could raise the policy interest rate again in the "not too distant future," depending on economic data, without further elaboration.
  • “Japanese economy is fragile due to the downside risk as the underlying inflation hasn’t reached 2% and the expected inflation hasn’t been anchored at 2%," Noguchi told business leaders. "But the [economic and price] conditions are improving steadily.”
  • Cash US tsys are ~1bp cheaper in today’s Asia-Pac session after yesterday’s ADP-induced bear flattener.
  • Cash JGBs are 1bp cheaper to 1bp richer beyond the 1-year (+3.3bps), with a steeper curve. The benchmark 10-year yield is 0.9bp lower at 0.817% after hitting a high of 0.837%.
  • Swap rates are slightly lower across maturities, apart from the 20-year (+3bp). Swap spreads are tighter out to the 10-year and wider beyond.
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In early afternoon trading, JGB futures are holding a downtick, -4 compared to the settlement levels, after strengthening following a solid 10-year auction.

  • The 10-year JGB auction saw the low price beat wider expectations. Moreover, the cover ratio rose to 3.529x from 3.17x at last month’s auction and the tail shortened to 0.02 from 0.09 in September.
  • BoJ board member Asahi Noguchi said the BoJ could raise the policy interest rate again in the "not too distant future," depending on economic data, without further elaboration.
  • “Japanese economy is fragile due to the downside risk as the underlying inflation hasn’t reached 2% and the expected inflation hasn’t been anchored at 2%," Noguchi told business leaders. "But the [economic and price] conditions are improving steadily.”
  • Cash US tsys are ~1bp cheaper in today’s Asia-Pac session after yesterday’s ADP-induced bear flattener.
  • Cash JGBs are 1bp cheaper to 1bp richer beyond the 1-year (+3.3bps), with a steeper curve. The benchmark 10-year yield is 0.9bp lower at 0.817% after hitting a high of 0.837%.
  • Swap rates are slightly lower across maturities, apart from the 20-year (+3bp). Swap spreads are tighter out to the 10-year and wider beyond.