Curve Flattens

JGB futures extended through their late overnight highs during early Tokyo trade, aided by the reaction of domestic participants to Wednesday’s price action in U.S. Tsys. Cash JGBs run 0.5-2.5bp richer across the curve, bull flattening, while 7s outperform their surrounding tenors on the bid in futures. The Nikkei 225 has held on to the bulk of its early uptick, while there has been a lack of meaningful domestic and macro news flow for participants to digest.

• Elsewhere, as noted earlier, the latest round of Japanese weekly international security flow data suggested that the sizable covering of short JGB positions on the part of international investors resumed last week, after a one-week break, with their net purchases of Japanese bonds comfortably topping the Y1tn mark for the third time in four weeks.
• 10-Year breakevens are a little narrower ahead of today’s 10-Year JGBi supply, printing at the lowest levels observed since early April in the process.