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Curve Steepens Into 40-Year JGB Supply

JGBS

JGB futures hit the lunch bell around the middle of their Tokyo range, -29, after the space showed no reaction to the latest round of unscheduled BoJ Rinban operations covering 5- to 25-Year paper, as the Bank looked to defend its YCC settings with 10-Year JGB yields testing the upper boundary of the mechanism.

  • Cash JGBs were 1-8bp cheaper across the curve, with 40s leading the weakness as the curve steepened, aided by setup ahead of this afternoon’s 40-Year JGB auction amid demand-related worry (more on that will follow in our impending auction preview).
  • This far outweighed any negligible impact from the aforementioned off-schedule Rinban purchases.
  • The steepening has seen the 10-/30-Year yield curve challenge the steepest levels of ’14.
  • Local headline flow has been inconsequential for the space, with familiar rhetoric re: FX markets from Japanese Finance Minister Suzuki and softer than expected PPI services data observed.
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JGB futures hit the lunch bell around the middle of their Tokyo range, -29, after the space showed no reaction to the latest round of unscheduled BoJ Rinban operations covering 5- to 25-Year paper, as the Bank looked to defend its YCC settings with 10-Year JGB yields testing the upper boundary of the mechanism.

  • Cash JGBs were 1-8bp cheaper across the curve, with 40s leading the weakness as the curve steepened, aided by setup ahead of this afternoon’s 40-Year JGB auction amid demand-related worry (more on that will follow in our impending auction preview).
  • This far outweighed any negligible impact from the aforementioned off-schedule Rinban purchases.
  • The steepening has seen the 10-/30-Year yield curve challenge the steepest levels of ’14.
  • Local headline flow has been inconsequential for the space, with familiar rhetoric re: FX markets from Japanese Finance Minister Suzuki and softer than expected PPI services data observed.