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Futures Outperform, 10-Year JGB Supply Goes Well

JGBS

JGBs have regained some poise in the wake of today’s 10-Year JGB auction. That leaves cash JGBS running unchanged to 4bp richer across the curve, while futures have managed to punch through their overnight high, last dealing +48, just off best levels.

  • Futures (and therefore 7s) outperformed all day, while the longer end has unwound the weakness that was observed in the latter rounds of Tokyo morning trade (which came as the Nikkei 225 rallied, and some space was made for the impending round of JGB supply).
  • Early Tokyo trade saw a bid on the back of the latest North Korean missile test, which flew over Japan, before landing in the Pacific Ocean, outside of the country’s EEZ, causing no damage. The lack of damage saw JGBs off their morning peaks and allowed the Nikkei 225 to rally further.
  • The latest round of 10-Year JGB supply was well received, with the cover ratio jumping to the highest level witnessed at a 10-Year auction since the multi-year high observed in May, as the price tail narrowed and low price matched wider expectations.
  • Spill over from the RBA-driven bid in the ACGB space would have helped JGBs during the Tokyo afternoon.
  • Local data had no tangible impact on the space, with Tokyo CPI virtually in line with wider exp.
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JGBs have regained some poise in the wake of today’s 10-Year JGB auction. That leaves cash JGBS running unchanged to 4bp richer across the curve, while futures have managed to punch through their overnight high, last dealing +48, just off best levels.

  • Futures (and therefore 7s) outperformed all day, while the longer end has unwound the weakness that was observed in the latter rounds of Tokyo morning trade (which came as the Nikkei 225 rallied, and some space was made for the impending round of JGB supply).
  • Early Tokyo trade saw a bid on the back of the latest North Korean missile test, which flew over Japan, before landing in the Pacific Ocean, outside of the country’s EEZ, causing no damage. The lack of damage saw JGBs off their morning peaks and allowed the Nikkei 225 to rally further.
  • The latest round of 10-Year JGB supply was well received, with the cover ratio jumping to the highest level witnessed at a 10-Year auction since the multi-year high observed in May, as the price tail narrowed and low price matched wider expectations.
  • Spill over from the RBA-driven bid in the ACGB space would have helped JGBs during the Tokyo afternoon.
  • Local data had no tangible impact on the space, with Tokyo CPI virtually in line with wider exp.