No Curve Balls From Ueda

JGB futures were defensive as Tokyo reacted to Friday’s moves in wider core global FI markets, leaving the contract -14 at the close. Participants were unwilling to force a meaningful break of the overnight session base in the contract, only managing a short-lived and modest look below (low to average cover ratios in BoJ Rinban covering 3- to 25-Year paper likely limited losses).

• Cash JGBs were more mixed, running 1bp cheaper to 2bp richer, with 7s providing the weak point owing to the move seen in futures. Super-long end outperformance may signal domestic life insurers putting some capital to work ahead of FY end after shedding super-long exposure in January.
• BoJ Governor-in-waiting Ueda appeared in front of the upper house in parliament today, mostly reiterating Friday’s comments made to the lower house.
• Note that the BoJ’s previously flagged limitations to SLF lending surrounding certain 10-Year JGBs (a move to protect YCC settings) went into action today.
• Looking ahead to tomorrow, preliminary industrial production data and 2-Year JGB supply are due. We will also hear from the government’s nominations for the BoJ Deputy Governor roles (Uchida & Himino), as they deliver their own nomination hearings to the upper house.