Curve Steepens, Futures Finish Off Highs

JGB futures firmed in the Tokyo morning, hitting the lunch bell 7 ticks above Friday's settlement levels, aided by the broader defensive feel to the session. The move took place alongside some twist steepening of the curve, which was likely driven by speculation surrounding and official confirmation of last week's reports pointing to Y600bn worth of additional 40-Year JGB supply in the FY21/22 budget vs. the current FY, while the total amount of JGBs issue will fall. The strength in futures unwound as we moved through the afternoon, with the contract closing 2 ticks above settlement levels on light headline flow.

• Elsewhere, the BoJ left the size of its 1-10 Rinban operations unchanged, with the following offer/cover ratios seen:
• 1-3 Year: 2.09x (prev. 2.47x)
• 3-5 Year: 3.21x (prev. 3.29x)
• 5-10 Year: 3.05x (prev. 3.26x)