Little Change In Futures Overnight As Market Digests The BOJ’s Dovish Tweak

In post-Tokyo trade, JGB futures uptick, closing +1 compared to settlement levels, with the market still digesting the implications of yesterday’s dovish YCC tweak from the BOJ.

• Yesterday the BOJ introduced the concept of a 1% upper boundary of its YCC framework being regarded as a "reference". This appeared to imply the possibility of allowing it to slightly exceed 1%, though the extent of flexibility the BOJ has introduced remains subject to debate. We'll need to monitor the BOJ's interventions to determine how far they are willing to let it rise.
• BOJ Governor Ueda has received a timely reminder of the pitfalls he faces in trying to tiptoe toward policy normalisation with the yen unexpectedly weakening, according to Bloomberg. (See link). That said, the yen has strengthened on the back of comments from Japan's top currency diplomat Kanda this morning, the pair last near 151.30. Lows for the session printed at 151.17, while opening levels were closer to 151.70.
• Overnight, cash US tsys finished dealing 3-5bps cheaper across the major benchmarks. US tsys ticked lower through the NY session yesterday, with firm Q3 employment costs, lingering concerns about US tsy issuance and position squaring ahead of this evening’s FOMC rate decision weighing.
• Today, the local calendar is light, with Jibun Bank Japan PMI Mfg as the only release.