Subdued Session, 2Y Supply Tomorrow

JGB futures are weaker and near Tokyo session cheaps, -12 compared to settlement levels.

• (MNI) The Bank of Japan's longer-term plan to normalise its monetary policy and raise interest rates remains intact, MNI understands, although policymakers will likely pause to assess the current situation in at least September, despite Governor Kazuo Ueda's recent comments to legislators that further hikes are still in play this year.
• However, recent market volatility will not derail the BOJ’s long-term rate hike plan considering real interest rates remain at very low levels and far below the perceived neutral rate.
• Cash US tsys are slightly cheaper in today’s Asia-Pac session after yesterday’s modest net movements.
• Cash JGBs are flat to 1bp cheaper across benchmarks. The benchmark 10-year yield is 0.9bps higher at 0.893% versus the cycle high of 1.108%.
• Swap rates are flat to 1bp lower out to the 7-year and 1-3bps higher beyond. Swap spreads are tighter out to the 10-year and wider beyond.
• Tomorrow, the local calendar will see weekly International Investment Flow data and the Consumer Confidence Index alongside 2-year supply.