JGB futures cracked through the YtD highs,.....>

JGBS: JGB futures cracked through the YtD highs, aided by OIS markets fully

pricing in a 10bp BoJ rate cut around the middle of 2020. Bulls now look to the

all time highs high registered in 2016 as their next major target. The contract

last trades 26 ticks higher, a couple of ticks shy of best levels.

- The short end of the curve outperformed with x-ccy basis flows indicating some

foreign demand in the sector, resulting in some light bull steepening of the

curve.

- The long-end of the curve will face a couple of challenges during the reminder

of the week; tomorrow brings about the latest 15.5-39 Year JGB liquidity

enhancement auction, while Friday will see the first round of 5-25+ Year Rinban

operations since the BoJ reduced the frequency of operations for 10-25 & 25+

Year paper in its June plans.