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Richer After A Solid 10Y Auction, Real & Labour Cash Earnings Tomorrow

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JGB futures are holding post-10-year auction gains, +28 compared to settlement levels.

  • The 10-year JGB auction went well, with the low price beating wider expectations, the tail shortening and the cover ratio rising to 3.662x from 3.151x at May’s auction.
  • Today's outcome sets a more optimistic tone ahead of next week’s BoJ monetary policy decision for a market that has faced mounting pressure since mid-December due to expectations of policy tightening from the BoJ.
  • (Reuters) BoJ Governor Kazuo Ueda said on Tuesday the central bank's basic stance is to allow market forces to set long-term interest rates. But he said the central bank will conduct "nimble" market operations if long-term interest rates spike, signalling the BoJ's readiness to ramp up bond buying when necessary.
  • (MarketWatch) BoJ Governor Kazuo Ueda also reiterated that the central bank could make further adjustments to its monetary policy if inflation grows in line with its projections. (See link)
  • Cash JGBs are richer out to the 30-year, with the futures linked 7-year outperforming (4.0bps richer). The benchmark 10-year yield is 2.7bps lower at 1.042% versus the cycle high of 1.101% set last week.
  • Swaps are slightly richer, with rates ~1bp lower. Swap spreads are mostly wider.
  • Tomorrow, the local calendar will see Labor and Real Cash Earnings and Jibun Bank Composite & Services PMI data.
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JGB futures are holding post-10-year auction gains, +28 compared to settlement levels.

  • The 10-year JGB auction went well, with the low price beating wider expectations, the tail shortening and the cover ratio rising to 3.662x from 3.151x at May’s auction.
  • Today's outcome sets a more optimistic tone ahead of next week’s BoJ monetary policy decision for a market that has faced mounting pressure since mid-December due to expectations of policy tightening from the BoJ.
  • (Reuters) BoJ Governor Kazuo Ueda said on Tuesday the central bank's basic stance is to allow market forces to set long-term interest rates. But he said the central bank will conduct "nimble" market operations if long-term interest rates spike, signalling the BoJ's readiness to ramp up bond buying when necessary.
  • (MarketWatch) BoJ Governor Kazuo Ueda also reiterated that the central bank could make further adjustments to its monetary policy if inflation grows in line with its projections. (See link)
  • Cash JGBs are richer out to the 30-year, with the futures linked 7-year outperforming (4.0bps richer). The benchmark 10-year yield is 2.7bps lower at 1.042% versus the cycle high of 1.101% set last week.
  • Swaps are slightly richer, with rates ~1bp lower. Swap spreads are mostly wider.
  • Tomorrow, the local calendar will see Labor and Real Cash Earnings and Jibun Bank Composite & Services PMI data.