[MARKET ANALYSIS] JGBs outperform as Katayama encourages pension funds to increase domestic investment

UST Futures are quiet, trading in a tight 5-tick range, following a rebound in Thursday’s session as energy prices fell. A quiet docket ahead in the US coming into the weekend.
Bund Futures trade at the top end of its 125.37-125.61 range. Bunds were unreactive following the ECB minutes, in which it stated that policymakers see core inflation above the 2% target across the entire projection horizon, despite the policy tightening. This signals a hawkish tilt and keeps further rate hikes on the table. Markets fully price in a rate hike in 2026 and a 60% chance of two hikes by year-end.
JGB Futures are trending higher, dipping to a trough of 126.50 early in the session before reversing and at session highs of 127.46, as of writing. The reversal came amid comments by Japanese officials. Economy Minister Kiuchi didn’t say anything that clearly drove JGBs, however FinMin Katayama highlighted BoJ independence and stated that they are going to prompt investment by Japanese assets by the GPIF and others.