Futures Surge Overnight, BoJ Rinban Operations Eyed

JGB futures benefitted from the worry surrounding recession in both Europe & the U.S. during the final overnight session of last week, adding 50 ticks vs. Tokyo settlement levels ahead of the weekend, with the contract finishing a little over 15 ticks shy of its overnight peak as U.S. Tsys faded from richest levels of the session. From a technical perspective, the latest pull higher in JGB futures has bulls looking to the Mar 14 high (150.44) as the next technical resistance point of note after the contract managed to briefly look above its 200-DMA.

• Note that JPX data, released after hours on Friday, revealed a 4th consecutive week of short covering of JGB futures positions on the part of international investors (akin to what has been observed in the weekly Japanese international security flow data), after the BoJ stepped in to defend its YCC parameters as international investors led the challenge of the BoJ’s resolve in June.
• There hasn’t been much in the way of meaningful domestic news flow for participants to digest over the weekend.
• Today’s local docket will be headlined by the latest round of BoJ Rinban operations, which covers 1- to 25-Year JGBs.