Futures And Long End Struggle

JGBs adjusted to Friday’s cheapening in core global FI markets during early Tokyo trade, which allowed futures to extend on their overnight session weakness.

• A base then formed alongside a similar dynamic in the wider core global FI markets, before a fresh round of softening became apparent as we moved towards the bell, although no clear catalysts were observed. Futures last -43, just off lows.
• Cash JGBs run little changed to 4bp cheaper, with 7s providing the weakest point on the curve, driven by the softness in futures.
• Demand in the super-long end on the part of Japanese life insurers and pension funds seems to have abated, at least for today, after signs of active capital deployment from that cohort at the tail end of last week.
• Flash PMI data and a liquidity enhancement auction for off-the-run 5- to 15.5-Year JGBs headline tomorrow’s local docket, although the swings in broader financial markets ae likely to provide more of a meaningful input than either of those events.