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(M1) Bullish Focus

JGBS: JGB yields edged lower ahead of Wednesday's 40-Year supply, after 2
sessions of noteworthy concession.
- The auction saw the cover ratio holding firm (at about average levels) and the
high yield printing 0.5bp below dealer expectations. It would seem that the
outright yield levels attracted lifers and pension funds to the offering, with
potential short cover & appealing relative value (albeit not in carry & roll
terms vs. 30-Years) outweighing fear surrounding recent volatility and the
latest adjustment to the BOJ's Rinban operations (a Y10bn trimming of the 25+
Year purchases back on Friday).
- That being said 30 & 40-Year paper underperformed in the afternoon, as the
rest of the curve firmed modestly while super long paper traded back to near
neutral levels.
- Futures failed to break below 150.00 and ticked higher as a result.
- Focus now turns to BOJ Rinban operations due later today, as well as a speech
from BOJ Governor Kuroda, followed by the BOJ's October JGB purchase plans &
summary of opinions from its latest MonPol decision, both due Friday.
MNI London Bureau | +44 0203-865-3809 |