7- To 10-Year Zone Leads Bid, While Super-Long Paper Cheapens

JGB futures squeeze higher in early Tokyo dealing, more than reversing their overnight weakness, to print +44, just under 10 ticks shy of yesterday’s post-BoJ spike peak.

• Local participants are perhaps building longs/covering shorts in futures post-BoJ, while also looking to Wednesday’s NY richening in U.S. Tsys, which was a product of soft U.S. economic data and firm demand at a 20-Year Tsy auction.
• Cash JGBs are richer out to 10s, with the 7- to 10-Year zone leading, while 20+-Year paper is cheaper as the curve twist steepens (that could be a further unwind of the favoured pre-BoJ flattener plays which used 10s as the short leg vs. longer paper).
• Swap rates are lower across the curve, with some curve steepening in play there and swap spreads mixed.
• Local headline flow has been fairly limited, outside of the previously covered weekly international security flow readings.