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JGB futures finished the morning session.......>

JGBS
JGBS: JGB futures finished the morning session 1.06 lower, 33 pips off worst
levels, with the low take up of the latest round of BoJ repo ops not
particularly helping sentiment.
- Cash trade has seen notable twist flattening of the curve, with 40s bid, swaps
very much tighter on the day across the curve.
- Belly's underperformance, coupled with swings in USD/JPY x-ccy basis could
point to position unwinds from abroad in the zone, with growing speculation that
the BoJ will not cut rates next week, and will instead choose to tinker with its
asset purchases (with most of the speculation surrounding greater headroom for
ETF buying), and likely focus on targeted lending measures. However, out latest
Insight piece has flagged the potential for the BoJ examining a move to target
shorter-dated yields on the curve under its YCC programme, perhaps in the 3-to-5
year sector.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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