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JGBS: Yield Swings Muted Ahead Of FOMC & BoJ Decisions

JGBS
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JGB futures are stronger, +5 compared to the settlement levels.

  • Outside of the previously outlined trade balance and machine orders data, there hasn't been much by way of domestic drivers to flag.
  • The market’s attention is on Friday’s BoJ MPM decision, where the board is expected to keep the policy rate unchanged at 0.25%. The upside risk to prices, driven by high import costs—previously a key concern for policymakers in July— has eased due to the yen’s recent appreciation.
  • Before that, the FOMC will announce its policy decision later today, with markets leaning more toward a 50bp rate cut than a 25bp move from the Fed.
  • Cash US tsys are ~1bp richer in today’s Asia-Pac session after yesterday’s modest sell-off. Yesterday’s session reflected position squaring ahead of today’s FOMC policy announcement.
  • The cash JGB curve has twist-flattened, pivoting at the 2-year, with yield swings bounded by +/- 1.5bps. The benchmark 10-year yield is 0.3bp lower at 0.826% versus the recent low of 0.74%.
  • Swap rates are 1-2bps lower out to the 30-year and 4bps higher beyond. Swap spreads are mixed.
  • Tomorrow, the local calendar will see Tokyo Condominiums for Sale data alongside an Enhanced Liquidity Auction covering OTR 5-15.5-year JGBs. 
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JGB futures are stronger, +5 compared to the settlement levels.

  • Outside of the previously outlined trade balance and machine orders data, there hasn't been much by way of domestic drivers to flag.
  • The market’s attention is on Friday’s BoJ MPM decision, where the board is expected to keep the policy rate unchanged at 0.25%. The upside risk to prices, driven by high import costs—previously a key concern for policymakers in July— has eased due to the yen’s recent appreciation.
  • Before that, the FOMC will announce its policy decision later today, with markets leaning more toward a 50bp rate cut than a 25bp move from the Fed.
  • Cash US tsys are ~1bp richer in today’s Asia-Pac session after yesterday’s modest sell-off. Yesterday’s session reflected position squaring ahead of today’s FOMC policy announcement.
  • The cash JGB curve has twist-flattened, pivoting at the 2-year, with yield swings bounded by +/- 1.5bps. The benchmark 10-year yield is 0.3bp lower at 0.826% versus the recent low of 0.74%.
  • Swap rates are 1-2bps lower out to the 30-year and 4bps higher beyond. Swap spreads are mixed.
  • Tomorrow, the local calendar will see Tokyo Condominiums for Sale data alongside an Enhanced Liquidity Auction covering OTR 5-15.5-year JGBs.