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JGBS: JGB futures were dragged lower overnight with the initial bout of pressure
coming on the back of a BBG BoJ sources piece which noted that "BoJ off'ls see a
need to keep a lower limit on JGB yields, with some of them seeing that limit
around -0.3%, according to people familiar with the matter. Some off'ls at the
central bank viewed rock-bottom yield levels that touched -0.295% earlier this
month as close to a point requiring action, according to the people. More
factors than simply the level would be taken into account before acting to keep
yields in check, but a lasting move or a surge below a lower limit would prompt
consideration of further action, the people said." The post ECB inspired whip
then saw the contract touch an overnight high before easing to fresh lows,
following core global FI. Futures finished the overnight session -22 ticks after
Tokyo trade saw the curve twist steepen as 30- & 40-Year paper underperformed,
largely driven by the internals in the latest round of 5-25+ Year Rinban ops.
- An enhanced liquidity auction for 5-15.5 Year JGBs, as well as final
industrial production and capacity utilisation data provide the points of
interest on the local docket today.
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