Futures Through Overnight Highs; Curve Twist Flattens

JGB futures are +29 ticks at 149.00 last, printing through its overnight high after the lunch break, aided by a bid in wider core global FI markets.

• Cash JGBs run 0.5bp cheaper to 4.0bp richer across the curve, twist flattening, and pivoting around 4s.
• The bid in the super-long end may be a result of continued interest on the part of domestic life insurers and pension funds after last week saw the super-long end test/register cycle highs in yield terms, while 10-Year JGBs continue to operate just shy of the upper limit of the BoJ’s permitted trading band.
• A solid round of 5-Year JGB supply saw cover and pricing metrics improving from the previous auction, likely reflecting the attractive outright and relative value observed. A light bid in 5s was observed post-auction, with yields hitting fresh session lows.
• Looking ahead, Wednesday will see core machine orders and industrial production data on tap, with BoJ Rinban operations covering 1-3, 5-10, and 25+-Year JGBs due as well.