Firmer On Tuesday

JGBs benefitted from the wider defensive tone observed during Asia-Pac trade, in addition to the smooth passage of off-the run JGB supply. These factors combined to leave futures +12 late in the Tokyo day. The wider cash JGB curve bull flattened, with the major benchmark JGBs running 0.5-2.0bp richer on the day. Note that 7s managed to outperform surrounding lines owing to the bid in futures.

• In terms of details, the latest liquidity enhancement auction covering off-the-run 5- to 15.5-Year JGBs saw smooth enough digestion with nothing in the way of notable change in spread dynamics and the cover ratio only seeing a slight moderation, holding comfortably above 4.00x.
• Japanese Finance Minister Suzuki noted that he plans to submit an extra budget to parliament tomorrow, while highlighting the government aim of firmly responding to price rises, given the threat that such a dynamic poses to consumption.
• Elsewhere, a senior BoJ official reiterated the Bank’s core mantra, noting that it will patiently continue with its powerful monetary easing to firmly underpin the economy, as the Bank looks to foster an improvement in wage growth.
• BoJ Rinban operations and an after market address from BoJ Governor Kuroda headline the domestic docket on Wednesday.