Futures continued to move lower into the.......>

JGBS: Futures continued to move lower into the close Weds. Some pointed to BBG

source reports re: trade matters, but there was little spill over into broader

asset classes, suggesting the move may represent an unwind after the recent run

higher. Similar moves were seen in the cash space, with the curve twist

steepening, after its initial flattening. Futures recovered a tad overnight.

- As a reminder the BoJ reduced the number of Rinban ops covering the 10-25 &

25+ Year JGBs in Dec to 4 apiece, from 5 prev. Wednesday`s Rinban ops are the

first to cover the aforementioned buckets in Dec. The BoJ upped the size of its

10-25 Year purchases by Y20bn to Y200bn, while it left the size of its 25+ Year

operations steady at Y50bn. If those purchase rates hold through the month, the

BoJ will buy Y100bn less of 10-25 Year JGBs vs. the prev rate & Y50bn less of

25+ Year JGBs vs. the prev rate. Offer to cover ratios for the Rinban ops: 5-10

Year 1.89 (prev. 1.78) 10-25 Year 2.58 (prev. 2.85) 25+ Year 3.32 (prev. 3.63)

- The usual guarded/dovish rhetoric from BoJ's Wakatabe did little to stir

trading activity. Focus now moves to today's liquidity enhancement auction for

off the run 15.5-39 Year JGBs.