Flatter Finish To The Week, Potentially Aided By Lifers

JGB futures traded either side of late overnight levels during early Tokyo dealing, with wider swings in risk appetite at the fore and a lack of notable market moving headline flow evident. A 2.5% rally in the Nikkei 225 likely capped the early bid in JGBs, with futures back below late overnight levels as a result, last +7.

• The wider JGB curve bull flattened, with the major benchmarks running little changed to 2bp richer. This was a product of Thursday’s firming across wider core FI markets, which has perhaps facilitated some lifer-based demand in the longer end of the curve.
• Rhetoric from BoJ Governor Kuroda reaffirmed the need for monetary easing, even as he noted that market functioning may be impaired by the BoJ’s actions. He also noted that it is inappropriate to link an exit from the Bank’s ultra-loose policy settings with his term as Governor.
• Elsewhere, comments from Japanese FinMin Suzuki reaffirmed well-known views re: wider currency market dynamics.
• BoJ RInban operations covering 1- to 10-Year JGBs saw a modest uptick in offer/cover ratios, but this had little impact on the space.