Futures Back from Best Levels, Curve Bull Flattens

JGB futures followed the broader gyrations in risk appetite, with the Ukraine situation front and centre. Futures built on their overnight gains in early Tokyo dealing, before fading a touch on the back of the Biden-Putin summit agreement in principle, hitting the bell +17. The long end of the curve led the bid for a second consecutive day, with participants seemingly happy to take the lead of Friday’s U.S. Tsy market bull flattening. That left the major JGB benchmarks little changed to 4.5bp richer come the lunch break. A reminder that Friday’s Tokyo session saw some dip their toe into the longer end of the curve after the notable steepening witnessed in recent weeks, resulting in bull flattening.

• Today’s BoJ Rinban operations drew the following offer/cover ratios:
• 1- to 3-Year: 3.01x (prev. 2.96x)
• 3- to 5-Year: 1.70x (prev. 1.96x)
• 5- to 10-Year: 1.88x (prev. 1.96x)
• Comments from Japanese PM Kishida offered little new. He flagged several reasons for the recent negative moves in the equity space, while pointing to a need for wider understanding of policy under his government. He also pointed to a need to boost salaries, while lifting broader prices in a manner that is commensurate with growth dynamics. He also noted that he will not rule out any measures when it comes to dealing with surging oil prices.