Global Core FI Impetus & BoJ Purchases Promote Twist Steepening Of The Curve

Spill over from weakness in core global FI markets triggered a round of unscheduled BoJ purchases in paper out to 10s (in both Rinban and fixed rate varieties), which provided a brief boost for JGB futures, before that particular impulse faded.

• JGB futures then printed through their overnight session base in the latter rounds of morning trade, but the move lacked meaningful follow through, allowing the contract to bounce, printing at unchanged levels ahead of the bell.
• The presence of the aforementioned BoJ purchases provided a twist steepening impulse on the curve, leaving the major benchmarks 2bp richer to 3bp cheaper, with 10s providing the firmest point on the curve as paper beyond that point cheapened.
• The summary of opinions covering the BoJ’s Dec meeting provided fairly run of the mill comments, generally within the confines of the lines of rhetoric that we have witnessed since the surprise YCC tweak.
• Looking ahead, weekly international security flow data headlines Thursday’s thin local docket, with the general direction of travel for wider core global FI markets and the potential for unscheduled BoJ JGB purchases eyed.