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Firmer & Flatter

JGBS

JGB futures nudged higher at the Tokyo re-open, as local participants reacted to Tuesday’s richening in wider core global FI markets, before the contract eased back towards late overnight session levels, hugging a tight range, last +11.

  • Cash JGBs sit little changed to ~4bp richer across the curve, with super long end demand evident (domestic life insurers may be at work further out the curve) during the Tokyo morning, allowing a bull flattening theme to develop.
  • BoJ Rinban operations revealed a downtick in the offer/cover ratios covering 1- to 3-, 5- to 10- & 25+-Year paper, which probably provided some incremental support to the space during the Tokyo afternoon.
  • Note that the richening in JGBs came even as swap rates moved higher, pulling swap spreads wider from both sides of the equation.
  • Looking ahead, 20-Year JGB supply headlines Thursday’s local docket.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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