Light Steepening Pressure, Prefecture Cancels Plans To Issue Long Bond

The super-long end of the JBG curve gradually cheapened as we worked through the Tokyo morning, with the long end of the wider global core FI sphere remaining under pressure in Asia-Pac dealing after Monday’s cheapening (the catalysts for the pressure in Asia-Pac hours have been flagged elsewhere). Paper out to 10s is little changed, dealing either side of flat, while futures hit the lunch bell off worst levels, +3 on the day.

• The breakdown of the latest round of BoJ Rinban operations revealed the following offer-cover ratios:
• 1- to 3-Year: 2.76x (prev. 3.08x)
• 3- to 5-Year: 1.62x (prev. 1.75x)
• 5- to 10-Year: 3.03x (prev. 2.61x)
• 10- to 25-Year: 3.04x (prev. 2.55x)
• This may result in some marginal twist steepening pressure during the early rounds of Tokyo afternoon trade, but we don’t think their will be much in the way of tangible market impact.
• Note that Shizuoka prefecture has cancelled its plans to sell 20-Year paper owing to market conditions & the rise in super-long yields This comes after the prefecture cancelled plans to sell 30-Year paper back in September.