Futures Off Lows, Curve Twist Steepness, 10-Year JGB Supply Due

Mixed performance on the JGB curve as the day wore on, with futures finding a base and the super-long end remaining under pressure. The former hit the lunch break -9, comfortably off of session cheaps, while the wider cash JGB benchmarks were 0.5bp richer to 3.5bp cheaper, with the curve pivoting around 7s, twist steepening. Swap rates are little changed to 2bp higher, resulting in wider swap spreads out to 10s, while 30+-Year spreads are narrower.

• The super-long end and swap rates seem to be driven by the movement we have seen in core global FI markets since yesterday’s local close, while the stabilisation in the belly is a little more up in the air when it comes to identifying a driver.
• As we flagged earlier, Comments from BoJ board member Takata stuck with the central BoJ view, as he underscored the need for the continued deployment of the Bank’s current easing settings, with an eye on the spill over from such settings, centred on market functioning matters. JGBs largely looked through his comments, with a very modest uptick in the JGB futures contract seen ahead of the Tokyo lunch break after it had already found a bit of a base pre-Takata, although the super-long end of the cash curve held its pre-Takata cheapening.
• 10-Year JGB supply headlines this afternoon.