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

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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.
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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.