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Cheaper As the Curve Bear Steepens

JGBS

JGB futures pulled lower at the open, as Tokyo reacted to Friday’s post-NFP cheapening in U.S. Tsys, allowing the contract to takeout its overnight session base. Since then, a little bit of stability for U.S. Tsys, which has seen that space edge away from session cheaps, alongside equities moving back from best levels, has facilitated a similar move in JGBs. That leaves the benchmark futures contract -25 at typing, while cash JGB trade has seen the curve steepen, with the major benchmarks running little changed to 2.5bp cheaper, as 40s present the weakest point. Note that 7s underperform surrounding lines on the weakness in JGB futures. Local data/news flow hasn’t impacted the space, with wider cross-asset flows at the fore thus far.

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JGB futures pulled lower at the open, as Tokyo reacted to Friday’s post-NFP cheapening in U.S. Tsys, allowing the contract to takeout its overnight session base. Since then, a little bit of stability for U.S. Tsys, which has seen that space edge away from session cheaps, alongside equities moving back from best levels, has facilitated a similar move in JGBs. That leaves the benchmark futures contract -25 at typing, while cash JGB trade has seen the curve steepen, with the major benchmarks running little changed to 2.5bp cheaper, as 40s present the weakest point. Note that 7s underperform surrounding lines on the weakness in JGB futures. Local data/news flow hasn’t impacted the space, with wider cross-asset flows at the fore thus far.