Futures Soften Overnight

JGB futures shed 6 ticks in overnight trade, more than reversing the early post-Tokyo gains after the latest FOMC decision, aided by the subsequent twist steepening in U.S. Tsys.

• It will be interesting to see if the impetus from the Tsy space halts/reverses the aggressive flattening trend seen over the last couple of sessions, with the likes of the 5-/40-Year yield curve pulling flatter after failing to breach cycle steeps.
• Domestic news flow remains light, largely geared towards COVID matters, which hasn’t been impacting JGBs.
• 2-Year JGB supply provides the highlight of a slim domestic docket on Thursday. Weekly international security flow will be examined to see if the recent trends continued (foreigner investors covering shorts in JGBs and Japan shedding foreign bonds).