Futures Marginally Lower Overnight, BoJ Matters & 2-Year JGB Supply Eyed

JGB futures ticked lower in overnight dealing, moving through Monday’s Tokyo low aided by the weakness observed in the U.S. Tsy space, but operating comfortably above the recently observed cycle trough. The contract ultimately shed 6 ticks come the end of post-Tokyo dealing, closing comfortably off worst levels of the session as U.S. Tsys stabilised into the NY bell.

• Much of the focus in today’s local press has fallen on the BoJ’s JGB holdings, with the Nikkei indicating that the Bank now holds over 50% of the JGB market. This doesn’t come as a surprise after the Bank reaffirmed its commitment to its current YCC settings by protecting the upper end of its permitted 10-Year JGB yield trading band in recent weeks, deploying large purchases. Elsewhere, the Nikkei has noted that “the Bank of Japan may have been saddled with as much as Y600bn in unrealized losses on its Japanese government bond holdings earlier this month.”
• 2-Year JGB supply headlines domestic matters today.