Firmer & Flatter On Global Cues & Presence Of Rinban

JGB futures pared the modest losses seen in the overnight session and more to sit +7 on the day ahead of the bell, with an uptick in core global FI markets and the presence of the BoJ Rinban operations (covering 1- to 3- & 5- to 25+-Year JGBs) helping generate a light bid. The major cash JGB metrics sit flat to ~3.5bp richer, with a flattening bias apparent, while 10-Year yields operate around the upper boundary permitted under the BoJ’s current YCC settings. Swap rates are essentially flat across the curve, dealing either side of unchanged.

• There hasn’t been much in the way of meaningful domestic headline flow to digest, with PM Kishida outlining the positive characteristics he identified in his nominee for BoJ Governor, Ueda. He also underscored his desire for continued close work between the government and the Bank.
• The aforementioned BoJ Rinban operations continued the run of subdued offer/cover ratios (1.3-2.4x across the buckets covered by today’s purchases).
• 5-Year JGB supply headlines the local docket on Thursday.