Futures Lower, Curve Steeper On Catch Up

JGB futures hit the lunch break just above session lows after moving lower at the Tokyo re-open, as participants adjusted for the weakness observed in core global FI markets since Friday’s Tokyo close, with the contract printing -31 at the lunch bell

• Cash JGBs sit flat to 6bp higher, with the super-long end still leading the cheapening, resulting in bear steepening. 10s are little changed, hovering around the upper limit of the BoJ’s permitted -/+ 0.25% YCC band.
• The details of the BoJ Rinban operations revealed the following offer/cover ratios:
• 1- to 3-Year: 3.25x (prev. 3.59x)
• 3- to 5-Year: 1.79x (prev. 2.50x)
• 5- to 10-Year: 2.06x (prev. 1.13x)
• 10- to 25-Year: 2.12x (prev. 3.25x)
• This shouldn’t provide much feed through in early afternoon trade but may result in a very modest bid.