Futures Extend Weakness, Bear Steepening Seen After Long Weekend

JGB futures have extended on the weakness observed after Friday’s Tokyo closed on the aforementioned cheapening in wider core global FI markets, dealing -32 at typing, but still operate comfortably off of September’s lows.

• Cash JGBs have steepened after the long weekend, with the major benchmarks running little changed to 4bp cheaper.
• 10s are little changed, given the proximity to the upper limit of the BoJ’s YCC mechanism, while 7s have softened more than surrounding tenors owing to the weakness in futures, matching the weakness seen in 30+-Year paper.
• BoP current a/c data provided a surprise, modest surplus in unadjusted terms and a slightly narrower than expected deficit in seasonally adjusted terms.