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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.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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