Following The Offshore Lead

While there has been little in the way of headline flow to wet the whistle for JGB traders, the broader weakness witnessed in core FI markets has dragged the space lower. Futures took out their overnight low, hitting the lunch bell 19 ticks below settlement levels, although broader core FI markets have managed to work off of their session lows during the Tokyo break.

• Cash JGB trade saw some bear steepening, with swap spreads widening across most of the curve. The JSCC/LCH spreads hold signs of foreign payers driving the moves in longer dated swaps.
• The BoJ left the size of its 1-10 Year Rinban operations as they were, with offer to cover ratios as follows:
• 1-3 Year: 1.86x (prev. 2.57x)
• 3-5 Year: 3.64x (prev. 2.89x)
• 5-10 Year: 2.37x (prev. 2.09x)