No Further Tightening Before December: Former BoJ Chief Economist

At the Tokyo lunch break, JGB futures are weaker and at session lows, -25 compared to the settlement levels.

• Outside of the previously outlined Machina Orders, there hasn't been much in the way of domestic drivers to flag.
• "The LDP leadership election will be held on September 27"- BBG.
• (MNI) Continuing US demand for Japanese exports over the next few months will be crucial for the Bank of Japan to be able to raise its policy rate again, with no further tightening likely before December, former BOJ chief economist Toshitaka Sekine told MNI.
• “There is a sense that Japan’s two-year notes with yields in the mid-0.3% level and five-year notes with yields in the 0.4% area are overbought, says Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management.” (per BBG)
• The market is waiting for BoJ Governor Kazuo Ueda to be called to parliament on August 23 to answer questions on monetary policy.
• Cash US tsys are flat to 2bps cheaper, with a flattening bias, in today’s Asia-Pac session, partially reversing the modest gains seen on Friday.
• Cash JGBs are 2-3bps cheaper across benchmarks, with the belly of the curve underperforming. The benchmark 10-year yield is 2.9bps higher at 0.905% versus the cycle high of 1.108%.
• The swaps curve has bear-steepened, with rates 1-5bps higher. Swap spreads are mixed.