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Twist-Flattening, 20Y Supply Tomorrow, Wage Neg. Increase Chance Of March Policy Move

JGBS

In Tokyo afternoon trade, JGB futures are unchanged compared to settlement levels on Friday.

  • There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Machinery Orders.
  • (MNI) Recent BoJ communications and results from spring wage negotiations have increased the chance of policy adjustment at the upcoming March 18-19 meeting, a former BoJ board member told MNI. “The BoJ stands ready to exit from easy policy anytime,” noted Makoto Sakurai in an interview, pointing to a recent speech by Deputy Governor Shinichi Uchida and recent releases, such as the January meeting’s summary of opinions. “Everything is all arranged, and a final decision depends on Governor (Kazuo) Ueda’s determination.” (See link)
  • With the domestic calendar light today and cash US tsys closed for the Presidents Day holiday, local market dealings have been subdued.
  • Cash JGBs have twist-flattened, pivoting at the 7s, with yields 1.5bps higher to 3.2bps lower. The benchmark 10-year yield is 0.3bp lower at 0.732% versus the February low of 0.665% and the Nov-Dec rally low of 0.555%.
  • Swaps and swap spreads are virtually unchanged.
  • Tomorrow, the local calendar sees Tokyo Condominiums for Sale data, along with 20-year supply.

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