Futures Back From Highs, 7s Buck Wider Cheapening Move In Cash JGBS

JGB futures have given back some of their post-Tokyo settlement, pre-weekend gains in early trade, hitting the lunch bell +53 on the day. Price action observed since the early downtick has been fairly limited, with the move lower coming alongside a broader round of weakness for core FI markets. Note that JGBs haven’t shown any real reaction to a subsequent bounce in core FI markets.

• Wider cash JGB trade sees most of the major benchmarks running cheaper on the day (to the tune of 0.5-2.5bp), with 10-Year JGB yields a touch above 0.23% and the curve bear steepening. 7s provide the exception to the trend, with the BoJ’s commitment to its ultra-easy policy settings at the backend of last week (coupled with the market-based policy tweaks we fleshed out earlier) supporting futures, with cash 7s catching up early this week.
• Local headline flow has been pretty non-existent since the Tokyo re-open.