JGBs Surge At Tokyo Open, U.S. Tsys Flat In Asia

Another muted round of Asia-Pac trade for U.S. Tsys saw T-Notes stick to a 0-04+ range, with cash Tsys exhibiting some very light twist flattening, operating within -/+1.0bp of Wednesday's closing levels at typing. Flow was headlined by a 5.0K block seller of FVU1 (~$255K DV01 equivalent), which helped pressure the belly of the curve. There was a lack of meaningful macro headline flow.

• JGB futures surged higher at the Tokyo re-open, with some pointing to CTA accounts as drivers of the move. The move has pared a little, as the contract last prints 11 ticks above yesterday's settlement levels, 13 ticks shy of session highs. 5s provide the firmest point of the curve, trading 2.0bp richer on the day. Japan's COVID policy chief (and Economy Minister) Nishimura outlined an extension of COVID related limits/states of emergency (most notably in Tokyo & Okinawa), which gave a fundamental reason to buy JGBs on the day, although the headlines weren't a surprise given the recent speculation/rhetoric re: the matter. The latest round of 5-Year JGB supply wasn't the firmest, with a lack of outright and relative value appeal likely crimping demand a little. The low price was lower than broader expectations (which stood at 100.60 per the BBG dealer poll), while the cover ratio softened and tail width held steady.