Futures Back From Post-BoJ Peak

JGB futures shed 27 ticks in the overnight session as global core fixed income markets came under pressure.

• This comes after an apparent continued round of short covering and good demand at the BoJ’s initial 5-Year Funds-Supplying Operations against Pooled Collateral supported the bely to intermediate zone of the curve on Monday.
• Local headline flow has been somewhat limited since the Tokyo close.
• Flash PMI data and a liquidity enhancement auction covering off-the-run 1- to 5-Year JGBs headline the domestic docket on Tuesday.
• Note that there is plenty of scope for BoJ-related moves to continue to drive matters on Tuesday. Such gyrations have allowed JGB futures to pare the bulk of the losses that were inflicted by the BoJ’s surprises YCC tweak in December and speculation surrounding another such move last week (which did not come to fruition), alongside steepening moves on the 10-/20-, 20-/30- & 30-/40-Year curves (flatteners were popular pre-BoJ, as another channel to speculate on the potential for a YCC tweak).