Futures Unwind Early Blip Lower

JGB futures initially blipped lower at the Tokyo open, adjusting to Tuesday’s late pullback in U.S. Tsys, before recovering from worst levels and then breaching the recent session highs. That leaves JGB futures running +45 ahead of the bell. Note that Tuesday’s cautious tone has weighed on Asia-Pac equities, which likely provided some background support for JGBs. Cash JGBs run little changed to 3.5bp richer across the curve as a result, with 7s leading on the back of the bid in futures. Note that payside flows have shown up again in super-long JGBs, resulting in the widening of super-long swap spreads from both sides as JGBs richen.

• Local news flow was light, with continued discussions surrounding the restart of the government-subsidised local travel scheme evident, although there was nothing in the way of firm details forthcoming.
• BoJ Rinban operations covering 1- to 5- & 10- to 25-Year JGBs had no meaningful impact on the market.
• 30-Year JGB supply headlines domestic matters on Thursday.