Futures Lead The Bid

JGB futures shunted higher in the Tokyo afternoon, with nothing in the way of overt headline flow to trigger the move, leaving the contract +30 ahead of the bell after it extended on overnight gains.

• Cash 7s moved to become the firmest point on the curve on the day as the major cash benchmarks sit 1bp cheaper to 2.5bp richer, with the early twist flattening theme remaining intact.
• The bid in 7s points to a futures-driven bid even after the uptick in the offer/cover ratio that we flagged in BoJ Rinban operations covering the 5- to 10-Year zone of the curve.
• In local news flow, rhetoric from BoJ board member Nakamura failed to move the needle, as he stuck with the central BoJ line re: the need for continued easing, as the Bank looks to foster the conditions for sustainable wage growth and promote demand-pull inflation dynamics.
• Final Q3 DP data, the monthly BoP print, the latest economy watchers survey & 5-Year JGB supply headline the domestic docket on Thursday.