JGBS: Bull-Flattener, Light Local Calendar
In Tokyo morning trade, JGM5 futures are stronger, +9 compared to settlement levels.
- “The steepening between two-year and 10-year JGB yields is likely to run out of steam as the Bank of Japan officials see several reasons not to intervene in the bond market. The impact of that is set to be felt bearishly, more at the short end of the curve, as traders’ price for more interest rate hikes this year. Two-year JGB yields still have a way to go before reaching the 1.25% area, now seen as a probable terminal rate by economists in a Bloomberg survey.” (per BBG)
- “Meanwhile, 30-year bond yields are already at levels not seen since 2006 which could get fixed income investors excited about bringing back funds from overseas. Indeed, next week’s BOJ decision is set to be a hawkish hold to open the door for a rate hike as early as May and that will be seen as a curve-flattening theme."
- Cash bonds are little changed so far in today’s Asia-Pac session.
- Cash JGBs are little changed across benchmarks out to the 5-year but 1-4bps richer beyond. The benchmark 10-year yield is 0.5bp lower at 1.519% versus the cycle high of 1.58%.
- Swap rates are 1bp higher to 2bps lower, with a flattening bias. Swap spreads are mixed.
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CHINA PRESS: Boosting Consumption Top Priority - Premier
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