A sharp move lower in JGBs saw a brief.........>

JGBS: A sharp move lower in JGBs saw a brief breach of the YtD lows for futures

during the morning session, although the contract managed to bounce from the

lows into the lunch break.

- There was no particular fresh catalyst for the move, but the space has eased

since Kuroda suggested that yields would be allowed to fluctuate by around

double the amount that was previously prescribed in his press conference

Tuesday.

- Short positioning into the BOJ decision may have exacerbated Tuesday's bid.

- The sell off resumed in the afternoon as the JSCC noted that there had been an

emergency margin call for JGB futures, with futures punching a new low, 10-Year

yields last 0.124%.

- The latest BOJ Rinban ops saw the Bank leave the size of the ops covering the

1-3 & 3-5 Year buckets unchanged. Looking at the breakdown of the operations,

the offer to cover ratio of the 1-3 Year bucket ticked up to 3.77 from 3.35,

while the 3-5 Year bucket's offer to cover ratio rose to 3.01 from 1.93.

- JGB bears look for a close below the 02 Feb 2018 low (150.09) in futures.