JGB Dynamics Eyed

TYH3 operates around late NY levels, -0-01+ at 113-15+.

• Cash Tsys finished Tuesday’s session little changed to 11bp cheaper, with bear steepening in play after the BoJ’s shock YCC tweak.
• 10-Year Tsy yields hit the highest levels of the months, with desks pointing to cleaner positioning as a potential extra factor aiding the move.
• Broader activity tailed off after a heavy Asia-Pac session, resulting in somewhat average volume session across the curve on the day, reflecting the time of year.
• A large block sale in TY futures (-10,674) and a late NY block sale in FV futures (-11,610) provided the NY flow highlights. Desks flagged buying from central banks and asset managers as a stabilising factor for the space during pre-NY dealing.
• Paper out to 7s moved through Asia-Pac cheaps around the time of the above TY block sale, before the space regained some poise as the NY day wore on.
• In the shorter end, heavy selling of FFF3 futures, includeing block flow, was noted.
• JGB price action will be a dictator of broader market sentiment during Asia-Pac hours, given the limited macro docket. Further out, consumer confidence and existing home sales data headlines in NY hours, with 20-Year Tsy supply also due.