All Eyes On Equities

Futures added 10 ticks during the Tokyo morning, with local equity markets struggling in the wake of Friday's Wall St. sell off (Nikkei 225 last -3.4%, below 28,000). The belly of the cash JGB curve led the rally as 7s richened by ~1.0bp, pointing to a bid that was perhaps driven by futures, with the wings of the curve hovering closer to neutral levels. Super-long swap spreads have tightened back towards the recent tights as a result. Broader news flow remains light, with wider macro cues set to remain in the driving seat given the lack of local risk events slated on Monday. Some have already started to speculate on the potential for the BoJ to step into the equity market and purchase TOPIX-linked ETFs given the morning sell off (TOPIX last -2.7%).