Bear Steepening Flips To Bear Flattening

JGBs came under some cheapening pressure as the Tokyo morning session wore on, with the curve steepening. 40-Year yields registered a fresh cycle high, with 20- & 30-Year yields printing a touch shy of their respective cycle peaks, with the recent run of pressure maintained.

• That was before a pull away from cheapest levels of the session in the super-long end, with the respective outright levels and steepness vs. 10s (which are capped by the BoJ’s YCC mechanism) perhaps luring domestic life insurers and pension funds in.
• Cash JGBs run little changed to ~1.5bp cheaper, with the front end now leading the cheapening, as the curve bear flattens.
• JGB futures last -7, sticking to a very narrow range.
• Local headline flow has been focused on FX matters, once again, with Finance Minister Suzuki highlighting the increased frequency of the monitoring of FX markets.
• BoJ board member Adachi stuck to the BoJ’s central script, playing down any suggestions that the Bank should tighten monetary policy, while providing familiar overtures re: the JPY. Elsewhere, BoJ Governor Kuroda failed to provide fresh, meaningful information.
• Looking ahead, the monthly trade balance reading and weekly international security flow data from the Japanese MoF headline the domestic docket on Thursday.