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Reverses Recent Downleg


5Y Upside Skew Buy

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The bounce in U.S. Tsy yields and broader equity markets provided some downside impetus to JGBs in after-hours trade. Futures finished 14 ticks below Tokyo settlement levels, representing worst levels of the overnight session. Still, this was not enough to completely reverse the rally witnessed since Friday's Tokyo close.

  • Much of the local overnight news flow was centred on matters surrounding the Tokyo Olympics.
  • Elsewhere, the BoJ confirmed that it bought Y70.1bn of ETFs on Monday ( a move that was widely expected given the weakness in the Japanese equity space), in what was the first round of such purchases lodged since April 21.
  • Today's local docket is headlined by 5-Year JGB supply, although more focus is likely to fall on the proximity to Thursday's 20-Year auction in the wake of the overnight cheapening.