BOJ: Fixed Rate Operation Offer

The Tokyo open saw JGB futures post an incremental look through last week’s lows on the firmer than expected domestic CPI data and spill over from Monday’s bear flattening in U.S. Tsys, before the contract worked away from lows.

• Still, it would seem that the threat of off-schedule BoJ bond purchases is shielding paper out to 10s from deeper losses, given the fact that 10-Year yields are probing the upper end of the BoJ’s tolerance band. JGB futures now trade +1 and cash JGBs are little changed to 1bp cheaper across the curve.

ACGBs have nudged away from worst levels, aided by a similar uptick in U.S. Tsys from their own session lows, unwinding some of the impetus from the overnight bear flattening in Aussie bond futures.

• Cash ACGBs run 0.5bp richer to 1.5bp cheaper across the curve, twist flattening, pivoting around 15s.
• YM and XM are -1.0 apiece, with the former back from a brief show below its overnight low after the Sydney open. EFPs are narrower, with the 3-/10-Year EFP box a touch steeper, while Bills run flat to 2 ticks cheaper through the reds.
• The Minutes of the RBA’s Sep policy meeting will be published in ~1 hour.
• STIR markets now price in ~43bp of tightening for the RBA’s Oct meeting, edging away from the peak observed on Monday (~45bp) after Westpac’s call for a 50bp rate hike in Oct.