Free Trial

Futures Below March Lows, 20Y Auction Showed Mixed Results, 2YY Highest Since 2009

JGBS

JGB futures are sharply weaker, -68 compared to settlement levels, and at session lows after today’s 20-year supply delivered mixed demand metrics. Today’s result was disappointing, particularly after April’s 10- and 30-year JGB supply set a positive tone for a market that had been under pressure since mid-December due to anticipated policy tightening by the BoJ.

  • The 20-year yield is dealing 3bps cheaper at 1.662% in post-auction trade and less than 10bps below the cycle high set in October.
  • Today’s data drop failed to be market-moving.
  • According to MNI’s technicals team, a stronger reversal higher is required to signal the end of the recent corrective phase. The bull trigger has been defined at 147.74, the mid-January high. A break would resume the uptrend. Moving average studies remain in a bull-mode set-up, highlighting an uptrend.
  • Cash JGBs are sharply cheaper, with the 20-40-year zone underperforming (around 9bps cheaper). The benchmark 10-year yield is 5.6bps higher at 0.862%, a fresh YTD high. The 2-year yield reached 0.272%, the highest level since 2009.
  • The swaps curve has bear-steepened, with rates flat to 9bps higher. Swap spreads are mixed.
  • Tomorrow, the local calendar sees Industrial Production and Capacity Utilisation data alongside BoJ Rinban operations covering 1- to 10-year JGBs.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.