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(Z1) Off Lows, But Remains Weak


Still Vulnerable


Bullish Price Sequence

JGBS: JGB futures registered fresh session highs in the afternoon, aided by
another solid round of upsized JGB supply, coming via the 5-Year variety.
Contract last +5 after pulling back from best levels, with the curve flattening.
5s unwound their underperformance post-auction, swaps mostly wider vs. JGBS.
- In terms of 5-Year supply specifics, there was an uptick in the cover ratio &
steady tail width vs. prev. auction (which was of smaller size). The low price
topped dealer exp. It looks like entry points via ASW & swap spreads may have
supported takedown, along with a backstop from the BoJ's active YCC policy.
- Elsewhere, the BoJ downgraded its econ assessment across all 9 Japanese
regions, while BoJ Governor Kuroda's latest comments offered nothing new.
- Foreigners remained net sellers of Japanese bonds in the most recent week,
registering a 2nd consecutive week of net sales, although the rate of the
shedding slowed (to Y746.5bn). They have been net sellers 4 of the last 5 weeks.
- COVID-19 testing has picked up in Tokyo resulting in a jump in the number of
new cases declared today, with the same touted for tomorrow.
- 1-3, 5-10 & 25+ Year BoJ Rinban ops headline locally on Friday.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |