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Off Cheaps As We Wind Into The Weekend


Weakness in core global FI markets biased JGB futures a touch cheaper ahead of the weekend, although the contract stuck to a contained range and recovered from session lows, sitting -9 ahead of the closing bell.

  • Yesterday’s after-hours tweak to BoJ fees for borrowing three on-the-run 10-Year JGBs (making shorting those lines more expensive) probably provided some counter t the cheapening (albeit not as forceful as some believed may be seen).
  • Cash JGBs run 1.5bp cheaper to 1.5bp richer, with a lack of uniform direction noted.
  • Swap rates are 0.5-1.5bp higher, meaning swap spreads are biased a little wider on the day.
  • Local headline flow remains limited, with focus squarely on the BoJ leadership plans and related knock-on impact on monetary policy.
  • BoJ speculation continues to dominate after the recent Bank leadership nominations from the government, with the latest BBG survey seeing 70% of the respondents looking for a tightening move by the end of July (up from the 54% in last month’s survey).
  • We also saw Finance Minister Suzuki reaffirm the government perception re: Ueda’s suitability to head up the Bank, with his communication skills once again highlighted.
  • The latest batch of BoJ Rinban operations headline on Monday.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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