Fresh Pressure After The Lunch Break

JGB futures have cheapened during the early rounds of Tokyo afternoon dealing, with the previously outlined uptick in the offer/cover ratio witnessed in today’s 5- to 10-Year BoJ Rinban operations pressuring that zone of the curve (note that the aforementioned offer/cover ratio was by no means elevated). The contract has printed fresh cycle lows and trades just above its worst level, last -16. Weakness in the longer end has also extended, 30s and 40s run ~2.5bp cheaper on the day., with the twist steepening observed during the morning session seeing a light extension, as paper out to 5s trades little changed to 0.5bp richer. 10-Year JGB yields are testing their morning highs and sit within 0.5bp of the level that triggered BoJ fixed rate operations back in in February (0.23%), when the Bank pre-emptively stepped in to reinforce the upper end of its permitted -/+25bp trading band.