Futures Essentially Flat, 7- To 20-Year Zone Weakest Area On Curve

JGBs lacked anything in the way of meaningful direction during Wednesday’s Tokyo session. The major cash JGB benchmarks are 2bp cheaper to 2bp richer across the curve, with the 7- to 20-Year zone providing the weakest point on the curve throughout the session.

• Meanwhile, JGB futures held to a relatively confined range, particularly by recent standards, last dealing -1 ahead of the close.
• The swap curve twist flattened, with 30+-Year rates nudging lower, while the 7- to 20-Year zone once again saw the biggest move higher, akin to yields on the JGB curve.
• Domestic headline flow was particularly light, with PM Kishida reaffirming recent rhetoric re: the BoJ, stressing its independence, while remaining non-committal re: the potential for a tweak to the government-BoJ accord on inflation.
• Elsewhere, ministerial rhetoric touched on fiscal matters re: childcare provisions, but there was little there for markets to latch onto.
• Offer/cover ratios remained in check across the latest round of BoJ Rinban operations (covering 1- to 25-Year JGBs), sitting at 1.5-2.6x.
• The lack of domestic catalysts left swings in wider core global FI markets at the fore.
• Looking ahead, 40-Year JGB supply headlines tomorrow’s domestic docket.