Back From Firmer Levels, Curve Flattens

Interesting to note that much of the early outperformance in the super-long end of the curve has stuck, even with broader risk appetite flicked back to “on,” given the confirmation of the Blinken-Lavrov meeting scheduled for next week. A reminder that the Japanese curve has steepened aggressively in recent weeks, with a lack of interest in the super-long end on the part of life insurers apparent, even with super-long yields tapping multi-year highs (note that yesterday’s 20-Year JGB was well-received, which surprised most). Cash JGBs are little changed to ~2.5bp richer on the day, bull flattening. Meanwhile, futures pulled back to late overnight session levels, hitting the bell +4 vs. settlement, tracking wider gyrations in risk appetite.

• Local headline flow has been relatively limited since the Tokyo open, with Chief Cabinet Matsuno pointing to a focus on driving wage growth through a variety of policy moves, while Finance Minister Suzuki noted that wage hikes are required in an inflationary scenario, in order to protect consumption.