Free Trial

Swaps Curve Bear-Steepens, US Tsys Continue To Pare Haven Bid, 2Y Supply Tomorrow

JGBS

JGB futures are weaker and at session lows, -46 compared to the settlement levels.

  • The local calendar is empty today, ahead of Jibun Bank PMIs and 2-year supply tomorrow.
  • The market’s focus this week, however, is the BoJ Policy Decision on Friday. No policy adjustment is anticipated at the two-day meeting ending on April 26, following last month's decision to raise rates for the first time since 2007.
  • (MNI) Bank of Japan officials believe the weak yen will drive an inflation rebound over the northern summer, sooner than bank economist expectations of an autumn bottom. This could drive the Board to consider raising its policy rate pre-emptively to keep ahead of the curve, MNI understands.
  • BOJ officials would prefer gradual rate increases over rapid hikes, which would considerably worsen economic activity.
  • The Bank estimates underlying inflation at about 1.7%, below its 2% price target, but the weak yen could boost that to 2% via the pass-through to imported goods. (See MNI link)
  • Cash US tsys are 2-4bps cheaper across benchmarks, with a steepening bias, as the market continues to pare the rally instigated by Israel’s attack on Iran on Friday.
  • Cash JGBs are cheaper across the curve, with the 7-year underperforming (yield +3.6bps). The benchmark 10-year yield is 3.1bp higher at 0.882% versus the YTD high of 0.891%.
  • The swap curve has bear-steepened, with rates 1-4bps higher. Swap spreads are mixed.
229 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.

JGB futures are weaker and at session lows, -46 compared to the settlement levels.

  • The local calendar is empty today, ahead of Jibun Bank PMIs and 2-year supply tomorrow.
  • The market’s focus this week, however, is the BoJ Policy Decision on Friday. No policy adjustment is anticipated at the two-day meeting ending on April 26, following last month's decision to raise rates for the first time since 2007.
  • (MNI) Bank of Japan officials believe the weak yen will drive an inflation rebound over the northern summer, sooner than bank economist expectations of an autumn bottom. This could drive the Board to consider raising its policy rate pre-emptively to keep ahead of the curve, MNI understands.
  • BOJ officials would prefer gradual rate increases over rapid hikes, which would considerably worsen economic activity.
  • The Bank estimates underlying inflation at about 1.7%, below its 2% price target, but the weak yen could boost that to 2% via the pass-through to imported goods. (See MNI link)
  • Cash US tsys are 2-4bps cheaper across benchmarks, with a steepening bias, as the market continues to pare the rally instigated by Israel’s attack on Iran on Friday.
  • Cash JGBs are cheaper across the curve, with the 7-year underperforming (yield +3.6bps). The benchmark 10-year yield is 3.1bp higher at 0.882% versus the YTD high of 0.891%.
  • The swap curve has bear-steepened, with rates 1-4bps higher. Swap spreads are mixed.