Light Pressure On BoJ Rumours

Aussie bond futures have showed lower early on Monday, digesting the previously covered source reports out of Japan re: Japan’s government being set to revise a decade-old joint statement with the BoJ which commits the Bank to achieving its 2% inflation “at the earliest date possible.” Discussions on the matter are set to commence with the new BoJ Governor in April next year, which could frontload a hawkish BoJ policy adjustment in the post-Kuroda era.

• Still the show lower has been a little limited, leaving YM -1.0 & XM -3.0, with the major cash ACGB benchmarks running flat to 4bp cheaper across the curve, with bear steepening in play. This comes after futures twist steepened on Friday, in sympathy with the move seen in U.S. Tsys.
• Bills sit -1 to +3 through the reds, with some light twist flattening in play.
• RBA dated OIS pricing is little changed to start the week, showing ~19bp of tightening for the Feb ’23 meeting, alongside a terminal cash rate of ~3.75%.
• The broader DM reaction to the BoJ story will likely dictate ACGB price action early this week, with nothing in the way of meaningful domestic releases noted until the minutes covering the latest RBA monetary policy meeting cross on Tuesday.