10-Year JGBs Testing 0.10%

T-Notes stuck to a tight 0-03+ range, with the contract last printing -0-01 at 135-26+. The cash space has seen some marginal bull flattening in the wake of yesterday's bear steepening, with 30s sitting 1.0bp richer on the day, leaning on the downtick in equity and crude oil markets during the timezone. On the flow side, there was a 20K block in the FVJ1 125.50/124.50 risk reversal, which looked to be buying the puts to the sell calls.

• JGB bears continue to test the 0.10% level in 10-Year JGB yields, with futures last -15, threatening a clean break below the June '20 lows. The benchmark hasn't printed sustainably above the 0.10% level since H218, with the latest attempt placing some light pressure on the broader core FI space. The belly underperformed in cash trade. Japanese CPI data for January was virtually in line with expectations and wasn't as soft as the readings witnessed in December. The latest round of 1-10 Year BoJ Rinban ops saw the purchase sizes left as they were, with the offer/cover ratios nudging lower.
• YM -2.0 and XM -6.0 In Sydney. The space looked through softer than expected local retail sales data and a firm round of ACGB Nov '25 supply, with the latter's average yield printing ~0.9bp through prevailing mids at the time of supply (per BBG pricing). The weekly AOFM issuance slate revealed a lone round of ACGB supply next week, in yet another change up to the weekly format. The AOFM will auction A$2.0bn of ACGB 2.50% 20 September 2030.