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JGBS: Twist-Flattener Ahead Of US Payrolls

JGBS
GlobalBulletAPACFixed Income BulletsJapanRegionMarkets

JGB futures are weaker but at session highs, -14 compared to settlement levels, as the market digests yesterday’s BoJ Policy Decision and Governor Ueda’s remarks.

  • Outside of the previously outlined Jibun Bank PMI Mfg, there hasn't been much by way of domestic drivers to flag.
  • BoJ-dated OIS pricing has firmed across meetings following the BoJ’s highly anticipated decision to hold rates steady yesterday. Prices have firmed by 2-5bps compared to Wednesday’s closing levels.
  • “The BoJ may have to raise interest rates to 0.75% next year if the government comes up with a large fiscal stimulus, Morgan Stanley MUFG Securities economists say. "An expansionary fiscal policy is likely to boost not only consumption next year but, given supply-side constraints like the structural labor shortage, inflation as well," the economists say in a note.” (per DJ)
  • Cash US tsys are flat to 2bps richer, with a flattening bias, in today’s Asia-Pac session. Yesterday, US tsys finished 1-3bps richer. Trading desks noted modest short covering from proprietary/trading accounts ahead of today's US Nonfarm Payrolls.
  • Cash JGBs have twist-flattened, pivoting at the 7-year, with yields 2bps higher to 1bp lower.
  • Swap rates are flat to 2bps lower, with a flattening bias.
  • The local market is closed on Monday. 
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JGB futures are weaker but at session highs, -14 compared to settlement levels, as the market digests yesterday’s BoJ Policy Decision and Governor Ueda’s remarks.

  • Outside of the previously outlined Jibun Bank PMI Mfg, there hasn't been much by way of domestic drivers to flag.
  • BoJ-dated OIS pricing has firmed across meetings following the BoJ’s highly anticipated decision to hold rates steady yesterday. Prices have firmed by 2-5bps compared to Wednesday’s closing levels.
  • “The BoJ may have to raise interest rates to 0.75% next year if the government comes up with a large fiscal stimulus, Morgan Stanley MUFG Securities economists say. "An expansionary fiscal policy is likely to boost not only consumption next year but, given supply-side constraints like the structural labor shortage, inflation as well," the economists say in a note.” (per DJ)
  • Cash US tsys are flat to 2bps richer, with a flattening bias, in today’s Asia-Pac session. Yesterday, US tsys finished 1-3bps richer. Trading desks noted modest short covering from proprietary/trading accounts ahead of today's US Nonfarm Payrolls.
  • Cash JGBs have twist-flattened, pivoting at the 7-year, with yields 2bps higher to 1bp lower.
  • Swap rates are flat to 2bps lower, with a flattening bias.
  • The local market is closed on Monday.