Futures Held Gains At Lunch, Higher Offer Cover In BoJ Rinban Operations

At the Tokyo lunch break, JGB futures sit mid-range at 148.76, +14 compared to the settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined comments from Governor Ueda in parliament re: seeing various uncertain elements over prices. Additionally, in response to questions from a lawmaker, he stated that consideration over fiscal management won’t prevent BOJ from doing what’s needed at the time of an exit from monetary easing. (link ICYMI)
• Bloomberg reports that Japan’s Financial Services Agency is monitoring whether financial institutions are providing customers with adequate explanations of risks and costs when selling structured bonds, Finance Minister Shunichi Suzuki says. (link)
• This morning’s BoJ Rinban operations saw flat to slightly negative spreads and higher cover ratios with the exception of the 3-5-year bucket (1-3-year: 3.07x, 3-5-year: 2.14x, 5-10-year: 2.68x and 25-year+: 2.705x), which may generate some slight pressure in early rounds of the Tokyo afternoon session, apart from the 3-5-year bucket.
• Cash JGBs are trading mixed at Tokyo lunch with yield movements ranging from +0.8bp (1-year) to -0.6bp (7-year). The benchmark 10-year yield is 0.2bp lower at 0.436%, ahead of today’s BoJ Rinban operations covering 1-10 years and 25-year+ JGBs.
• Swap rates are 0.3-0.5bp lower across the curve apart from the 10-year rate, which is slightly higher. Swap spreads are mixed across the curve.