Firm Despite headwinds

{JN} JGBS: JGB bulls have managed to consolidate the early bid in futures, last +15, with the wings of the curve leading the richening in the cash space as we move towards the close. This was despite a lacklustre 30-Year auction, with the broader cash JGB space now marginally cheaper on the day. Suga's apparent tightening grip on LDP Party leadership and catch up to U.S. Tsy flattening were seen as the supportive factors for the space today.

• In terms of auction specifics, 30-Year supply was less than convincing, even as we saw the cover ratio tick ever so slightly higher and tail narrow vs. the previous 30-Year auction (the latter remained pretty wide). The low price missed dealer expectations (BBG poll pointed to 99.60). Most remain wary of the supply pressure evident in the longer end of the curve, with a lack of relative BoJ Rinban support also noted. Still, there is a bias towards steepening within the sell side which may see the traditional positioning headwinds limit any such move, absent fresh fundamental drivers.
• Elsewhere, we saw comments from BoJ dovish dissenter Kataoka, reiterating his well-known views, while some of the candidates in the ruling LDP Party's leadership race re-affirmed their own core views.
• 5-10 Year BoJ Rinban ops headline tomorrow.