Off Best Levels, 30-Year Supply Imminent

JGB futures fell away from best levels into the Tokyo lunch break, with core fixed income markets retreating from richest levels as equity indices regained some poise. This left JGB futures -1 at the lunch bell, while cash trade saw the major JGB benchmarks finish the morning session little changed to 1bp richer, with 40s outperforming on the curve.

• BBG’s latest BoJ sources piece noted that the BoJ is fully committed to its easing stance, while noting that it is set to adjust its forecast for CPI in the current FY to 2% or more (the latest sources piece to suggest such a move) in addition to considering an upward revision to its CPI forecast for next FY. The piece also suggested that the Bank will consider marking down its economic growth forecast for the current FY.
• Note that Tokyo’s local government has started to discuss the possibility of deploying fresh COVID curbs in the city, although Japanese Deputy Chief Cabinet Secretary Kihara has noted that the national government is not considering deploying COVID restrictions at present, with flexible measures to be deployed as necessary.
• 30-Year JGB supply is due shortly after the lunch break (see more on that matter in our recently published auction preview).