Futures Pare Overnight Gains

JGB futures initially spiked through their overnight high as Tokyo reacted to the impulse derived from the softer than expected U.S. JOLTS data released Tuesday, before paring the bulk of those gains to sit +9 ahead of the close. Cash JGBs run 1.5bp richer to 0.5bp cheaper, with the 7- to 10-Year zone outperforming on the bid in futures. Swap rates are a touch lower on the day, fading from session extremes alongside JGBs.

• Subdued to average offer/cover ratios in today’s BoJ Rinban operations (covering 1- to 5- & 10- to 25-Year JGBs) and U.S. Tsys finding a bit of an intraday base (within tight ranges) helped stabilise JGBs in the Tokyo afternoon, with futures off worst levels. Note that today’s Rinban was the first round of purchases after the BoJ’s well-documented tweak to the Q2 purchase bands, with 10- to 25-Year paper receiving a Y50bn uptick in purchases today (after the reduction seen in purchase sizes covering that bucket during March)
• LDP Secretary General Motegi noted that Japan doesn’t intend to lift taxes or issue debt to facilitate PM Kishida’s measures aimed at supporting families.
• On the corporate issuance side Berkshire Hathaway has mandated banks for JPY issuance, with the deal reportedly set to follow in “the near future,” as Warren Buffett’s company returns to the JPY debt market.
• Weekly international security flow data from the MoF and 30-Year JGB supply headline tomorrow.