Away From Lows After Supply, BoJ Steps In Again

Futures nudge a little higher in the early Tokyo afternoon, aided by the smooth passage of 5-Year JGB supply (covered in an earlier bullet), leaving the contract -62, although it has pared back from its post-auction peak.

• The curve in general has moved away from session cheaps, with 5s still presenting the weakest point, last dealing ~2.5bp cheaper on the day.
• The bid may have been aided by the fairly modest offer/cover ratios observed within today’s BoJ Rinban operations (which stood between 1.9-3.1x, the most elevated coming in the 5- to 10-Year bucket, as you would expect given the current challenge of the BoJ’s will).
• We have just seen a second round of unscheduled Rinban offers tendered, albeit at smaller sizes and covering less tenors than this morning’s purchases (see prior bullet for more details), with JGBs unreactive to that news. 10-Year JGB yields still show above 0.50%.