Futures finished the morning session just......>

JGBS: Futures finished the morning session just shy of best levels, 15 ticks

higher on the day. The early part of the session saw the space supported by

broader risk-off flows. Some pointed to the breakdown of the latest Nikkei

manufacturing PMI out of Japan, which noted that the "export orders declined at

the fastest pace in >2 years, while total demand picked up only modestly.

Confidence also continued to fall."

- Futures briefly moved back from then session highs after the BoJ cut the size

of its 5-10 Year Rinban operations to Y430bn (prev. Y450bn), while it left the

size of its 10-25 & 25+ Year purchases unchanged. Offer to cover ratios for

today's operations were as follows: 5-10 Year 2.18 (prev. 2.84), 10-25 Year 1.82

(prev. 2.58), 25+10 Year 2.29 (prev. 3.32)

- Broader risk assets then came under pressure, with soft Chinese activity today

adding an additional layer of support for JGBs, as the Nikkei finished the

morning session ~1.7% lower. Cash trade has seen the 5-10 Year sector

outperform, despite the latest Rinban tweak from the BoJ. 10-Year yields last

0.043%.