Futures Tick Lower, Super-Long Weakness Catches Up With Futures

JGB futures extended their Tokyo CPI-driven downtick as the morning wore on, with firmer than expected PMI data out of China further aiding the direction of travel. Futures hit the lunch break -39, a little above worst levels of the day. Cash JGBs run little changed to ~3bp cheaper, with weakness in the 20+-Year zone catching up to the futures-driven weakness in 7s, while the early super-long swap spread widening has been unwound.

• In terms of local headline flow, Finance Minister Suzuki flagged a wide range of possible funding methods for the government’s family support scheme, although he noted a degree of caution re: the potential issuance of “education bonds.” He also stressed that monetary policy should be left to the BoJ while outlining expectations for incoming BoJ Governor Ueda to conduct monetary policy in a ‘solid’ manner.
• Elsewhere, the IMF once again pushed the idea of the BoJ adopting greater flexibility in the long end of JGB the curve under its YCC mechanism, while pointing to yields out to 5s as the most important zone of the yield curve re: real economic activity.
• The previously outlined quarterly BoJ Rinban plan, which will cross after hours, provides the highlight of the local docket ahead of the weekend.