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Subdued Session Ahead Of BoJ Ueda’s Parliamentary Appearance Tomorrow

JGBS

At the Tokyo lunch break, JGB futures are weaker and near session cheaps, -9 compared to the settlement levels.

  • Outside of the previously outlined weekly International Investment Flow and Jibun Bank PMIs, there hasn't been much in the way of domestic drivers to flag.
  • Machine Tool Orders data are due later alongside an Enhanced Liquidity Auction for 5-15.5-year OTR JGBs.
  • (Bloomberg) Governor Kazuo Ueda will face intense market scrutiny Friday after the Bank of Japan’s rate hike and his clear hawkish signals contributed to a meltdown in global financial markets earlier this month. (See link)
  • According to MNI’s technicals team, the sharp rally in JGB futures earlier this month has confirmed a bullish reversal and in the process cleared a number of important resistance points. A continuation higher would pave the way for a climb towards 147.74, the Jan 15 high and a bull trigger. Any exhaustion of this bullish move would see momentum shift lower, initially targeting 143.57, the Jul 17 high. A move lower would likely be a correction.
  • Cash US tsys are flat to 1bp cheaper across benchmarks in today’s Asia-Pac session.
  • Cash JGBs are slightly mixed across benchmarks, with yield swings bounded by +/- 1bp. The benchmark 10-year yield is 0.2bp higher at 0.882% versus the cycle high of 1.108%.
  • Swaps are also little changed.

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