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Futures Slightly Stronger Overnight After A Solid US Tsy 20Y Auction

JGBS

In post-Tokyo trade, JGB futures are richer, closing +6 compared to settlement levels, after US tsys finished with a twist-flattening of the curve, pivoting at the 5s. US yields finished 3bps higher to 2bps lower. The 20-year finished 2.2bps richer after supply saw better than expected demand metrics, with an above-average bid/cover ratio and indirect take-up observed.

  • Before the auction, US tsys ticked lower in narrow ranges with little reaction to Richmond Fed President Barkin, who noted that now isn't the time for forward guidance and that inflation numbers were coming down "nicely".
  • WTI was up ~2% as the OPEC+ meeting comes into view, with some market intervention to bolster prices now a possibility. This appeared to weigh on the short-end of the US tsy curve.
  • Wall Street enjoyed a bullish session, kicking off the holiday-abbreviated week. The NASDAQ climbed over 1%, while the S&P 500 advanced 0.7%.
  • The local data calendar is empty today. However, the MOF does plan to sell Y1.2tn of 20-year JGBs.
  • The latest insight from the MNI policy team in Tokyo suggests the BOJ needs to see signs of positive wages growth to confirm a turn in the wage-price cycle (see this link for details).

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