Off Best Levels

JGBs backed away from richest levels of the session, with futures giving back a portion of their overnight/early Tokyo rally, to sit +17 at the lunch bell, while the major cash JGBs run flat to 2bp cheaper across the curve, with the super-long end leading the way lower as early gains across the curve were reversed.

• We didn’t see much in the way of headline catalysts for the reversal, but remind that we had already seen a notable round of richening for super-long JGBs on Wednesday, post-30-Year supply.
• BoJ Governor Kuroda’s appearance in front of parliament drew familiar comments re: wages, the need to continue to deploy ultra-loose monetary policy, the potential for a slow move in the Japanese mindset surrounding inflation and no desire to influence policy beyond his current term. Comments on FX markets also provided no surprises.
• He also pointed to the potential for a deeper move into negative interest rate territory, if required, although highlighted that he was unsure of how much further interest rates could be lowered.