Heavy

It has been a heavy return to trade for JGBs, with futures last dealing 22 ticks lower on the day, just above session lows, as the pressure witnessed in the U.S. Tsy space on Thursday spills over. 7s represent the weak point on the cash JGB curve, cheapening by 2.0bp, with shorter dated paper little changed and longer dated paper running ~1.0bp cheaper. The fact that 7s are leading the cheapening may point to futures driven activity. Meanwhile, 5+-Year swap spreads are generally wider on the day (7s are the exception to rule, given the move in cash JGB space), suggesting that payside swap flow is aiding the broader cheapening in the cash JGB space. The incoming round of BoJ Rinban ops, covering 1- to 10- & 25+-Year JGBs, is now eyed, with slightly softer than expected national CPI data having no impact on the space.