Futures Off Cheaps, Long End Remains Bid, No Reaction To BoJ Purchases

Futures prove unreactive to the initial wave of BoJ fixed rate and Rinban operations, with no deviations from the scheduled purchases in maturity terms, although there was a notable upsizing of the Rinban purchases covering the 5- to 10-Year bucket (up to Y775bn, which aligns with the upper limit of the operation purchase size band outlined in the BoJ’s Q1 purchasing calendar). Futures were already off worst levels after bears failed to test the previously outlined cycle base, last -29. Meanwhile cash JGBs twist flatten, with paper out to 20s running little changed to 2bp cheaper (7s still lead the weakness there), while 30+-Year paper is 1-2bp richer, with the bid witnessed since the smooth passage of yesterday’s 30-Year JGB auction proving somewhat sticky.