A Touch Cheaper This Morning

The space has seen a modest downside bias during the Tokyo morning, with futures looking below their overnight low at the re-open, before recovering from worst levels after failing to test their recent trough, which lies just above the 150.00 level. The contract hit the lunch bell 8 ticks below settlement as a result, with the major cash JGB benchmarks little changed to 1bp cheaper. Light bear steepening has been in play, with the long end perhaps making room for this afternoon’s liquidity enhancement auction covering off-the-run 15.5- to 39-Year JGBs. Local headline flow has been limited.