JGB futures were whacked lower in Tokyo,.......>

JGBS: JGB futures were whacked lower in Tokyo, some pointed to unwinds of FX

hedged trades from offshore, with the moves seen in USD/JPY x-ccy basis.

Contract 83 ticks lower on the day. Swaps much tighter across the curve.

- Belly was the notable underperformer on the move, while the short end was

pressured by a continued barrage of source reports suggesting that the BoJ will

not move its key interest rate 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 (as the IMF suggested at the backend of last year).

- Elsewhere, a lack of take up at the BoJ's latest round of repo ops (Y0.5bn out

of Y500bn offered), and a hastily announced 5-10 Year-round of BoJ Rinban

operations were also seen. The latter saw a notable uptick in the offer/cover

ratio of 3.91x (prev. 2.22x), with spreads widening dramatically +0.045 vs.

-0.017 last time out.