JGB futures held to a tight range, last +7.....>

JGBS: JGB futures held to a tight range, last +7 ticks with the curve flattening

as super-long paper outperformed for a 2nd session after Wednesday's sharp sell

off. There was a poor 2-Year auction, drawing the lowest cover ratio since '15

as the outright yield richness on a historical basis seemingly outweighed the

prospect of further BoJ easing & any cheapening for foreign investors based on

x-ccy basis gyrations (with JPY x-ccy basis swaps snapping lower on the day to

account for calendar year end). Low price was just below that exp. in the BBG

poll. Also worth highlighting that foreign investors sold a net Y3.1486tn worth

of Japanese bonds in the week to Sep 20, the largest amount of weekly net

selling on record (going back to '01). This pushed the 4-week rolling sum of the

measure well into -ve territory, with that particular metric now reflecting the

deepest amount of net selling seen since Oct '18. Tokyo CPI data had no impact.

- The summary of opinions from the BoJ's most recent MonPol decision will

generate the most interest on Monday, after the bank opened up the potential for

looser MonPol at its October meeting. The BoJ will also conduct its latest round

1-5 Year Rinban ops and release its Rinban outline for October on Monday.