Futures Tight, Curve Twist Steepens

A very sedate morning session for JGB futures, with the contract continuing to operate in familiar territory, hitting the break 2 ticks above settlement levels. The cash curve has seen some twist steepening, given the potential for additional 40-Year JGB issuance (as outlined by primary JGB dealers at recent MoF meetings and flagged previously), which could be deployed to finance the latest supplementary budget (although, as outlined previously, total issuance requirements for the package will seemingly be in the region of the median view, avoiding the more burdensome end of the scale. The maturity mix of the issuance will also be key). 6-Month bill supply and a liquidity enhancement auction for off-the-run 5-15.5 year JGBs hit this afternoon.