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JGBs have been a little less reactive to the...>

JGBS: JGBs have been a little less reactive to the RBNZ, with the long end of
the curve firming ahead of 30-Year supply, on the back of some underperformance
yesterday. Today's 30-Year JGB auction could have knock on effects for global
bonds. In outright terms, the benchmark 30-Year yield has operated in a ~20bp
range in the time since the most recent auction, touching the highest level seen
since October of last year, of course inspired by the tweaks to the BOJ's YCC.
While the headline yields seem attractive, the auction will be a test of
super-long demand against the backdrop of the BoJ-induced volatility. The
volatility has seemingly discouraged Japanese life insurers from entering the
market, with a focus on where 10-Year yields will settle. 0.8% is usually viewed
as a threshold in the tenor, whereby life-insurers typically become more active.
- Some suggest that the line looks cheap on the curve, and point to this
supporting demand.
- Futures have stuck to a tight range, with attempts to rebound limited by the
150.17 level, keeping the focus on the downside. Intraday support is placed at
150.03, but a break below will return the focus to 149.95.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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