Futures Hold Early Gains; Bid In Super-Long End Extends

JGB futures have kept within their overnight range so far, sitting +22 at the lunch break, holding onto the bulk of their early Tokyo bid, which was aided by light richening in wider core global FI markets.

• Cash JGBs run 0.5bp cheaper to 4.0bp richer across the curve, twist flattening, with a pivot around 5s.
• The bid in the super-long end may be a result of continued interest on the part of domestic life insurers and pension funds after last week saw the super-long end test/register cycle highs in yield terms, while 10-Year JGBs continue to operate just shy of the upper limit of the BoJ’s permitted trading band.
• Up next, results from the auction of 5-Year JGBs will cross early in the Tokyo afternoon, with focus then turning to U.S. CPI data, due in Tuesday’s NY session.