COVID Outweighs Soggy Supply

JGB futures held a tight range during Tokyo dealing, last +10 vs. settlement levels. The long end has outperformed in cash JGB trade (receiving in 30+ Year swaps seemingly helped), even with a slightly weaker than prior 20-Year JGB offering, which saw the cover ratio nudge lower and price tail edge wider. The cover ratio represented the lowest such reading seen at a 20-Year auction since April's 20-Year offering. Still, the low price topped dealer expectations (proxied by the BBG dealer poll).

• Local COVID matters were front and centre, which outweighed the aforementioned supply matters, with Tokyo reporting a record uptick in new COVID cases. Elsewhere, the Nikkei reported that the Tokyo Metropolitan Government is making final arrangements to raise its alert to the highest of four levels to warn the coronavirus is spreading. Another Nikkei report suggested that Japan's ruling government is considering a plan to spend a combined Y12tn in five years from FY21 for "disaster-proof infrastructure." Japanese Finance Minister Aso later noted that the country will continue to target a balanced budget by the end of FY25.
• BoJ Governor Kuroda offered little new in his latest address, playing down the impact of the recent Special Deposit Facility tweak re: the broader direction of monetary policy.