JGBS: Bull-Flattener, BOJ's Ueda Avoids October Rate Hike Signal

In Tokyo morning trade, JGB futures are stronger, +13 compared to settlement levels.

• (MNI Brief) Bank of Japan Governor Kazuo Ueda said Friday the central bank will raise its policy interest rate if the outlook for economic activity and prices materialises as expected, while stopping short of signaling an imminent move.
• “To determine whether economic activity and prices are improving, the Bank will, for the time being, monitor factors such as the points I mentioned -- namely, developments in the global economy, especially the U.S. economy; the impact of U.S. tariff policies on Japanese firms' profits and wage- and price-setting behavior; and price developments, including food prices,” Ueda told business leaders in Osaka.
• The BOJ will carefully weigh both upside and downside risks when judging the likelihood its baseline scenario will be realised, he added, stressing that decisions will be made “as appropriate and without any preconceptions.”
• Cash US tsys are cheaper in today's Asia-Pac session, with yields flat to 1bp higher.
• Cash JGBs are flat to 2bps richer across benchmarks. The benchmark 10-year yield is 0.1bp lower at 1.660% versus the cycle high of 1.674%, set yesterday following the poor auction.
• Swap rates are ~1bp lower.