Futures finished the morning 4 ticks lower.....>

JGBS: Futures finished the morning 4 ticks lower at 150.85 in a range-bound

session as 3 month JPY basis continues to tighten.

- The curve has seen some marginal underperformance in the 5-20 Year sector

ahead of todays 5-15 Year liquidity enhancement auction via old 10, 20 & 30-Year

JGBs.

- Issues surrounding a lack of liquidity in the cash space continue to do the

rounds, with bank holdings of JGBs at relatively paltry levels as the BoJ

dominates proceedings in the market. BofAML note that "at the end of December

2017, the BoJ held 43.2% of outstanding long-term JGBs, 4.6x more than before

QQE. Banks held 16.8% of outstanding long-term JGBs, a big drop from when QQE

started, but the decline has slowed recently."

- From a technical perspective the recovery from 200-DMA tests that defined last

week appears to be in trouble with follow through lacking above the 21-DMA

(150.89). Bulls now need a close above 150.97 to confirm focus on layers of

resistance 151.15-19. The 150.85 support is key. Bears now need a close below

this level to return focus to 150.55-150.73 where key DMAs are clustered.