Cash Little Changed, Futures Unwind Overnight Losses

JGBs stuck to narrow ranges in Monday trade, essentially operating at near enough unchanged levels for most of the session, as the broader risk-off impulse and press reports surrounding initial government spending proposals for its defence plans offset.

• That allowed JGB futures to unwind their overnight losses and a little bit more, with the contract +4 into the bell. Elsewhere, cash JGBs deal either side of unchanged, and sit within 1bp of Friday’s closing levels.
• Note that the offer/cover ratios for the BoJ Rinban operations spanning 3- to 25+-Year JGBs were average to below average, which may have provided a source of incremental support in the afternoon.
• Comments from Japanese PM Kishida & BoJ Governor Kuroda failed to move the needle.
• Looking ahead, Tuesday’s local docket is headlined by the latest monthly labour market report and 2-Year JGB supply.