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Flat To A Touch Richer Across The Curve


Cash JGBs are flat to 2bp richer, with 5s outperforming on the curve. The long end lags the bid, likely owing to the presence of this afternoon’s 40-Year JGB supply. Futures nudged higher at the re-open, but remain comfortably within their recent rage, last +11.

  • Headlines surrounding the summary of opinions of the BoJ’s January meeting have largely reaffirmed familiar rhetoric, stressing the need for continued easing, as well as a requirement for more time to assess December’s surprise YCC tweak. There is also hope that the well-documented adjustments to the BoJ’s funding operations help improve market functioning. There was also some inference re: the Bank’s inflation goal being some distance away, while well-documented upside risks to inflation were highlighted.
  • Elsewhere, a Nikkei article re: the allocation of capital on the part of Japanese investors provided the following snippets:
  • “I plan on buying more JGBs once I redeem foreign bonds.”
  • “If long rates rise to around 0.7%, JGBs will become an attractive instrument that is both liquid and creditworthy.”
  • “Life insurers could shy away from long-term government bonds if they expect the BOJ to further adjust its policy, which would drive down bond prices.”
  • “Life insurers in particular are placing their proceeds from unloading foreign bonds into deposits and other short-term investments, so they have significant capacity to buy more JGBs.”
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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