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A$ Rallies On More Hawkish RBA Outlook


Bounce Considered Corrective

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Little Changed To a Touch Cheaper


Cash JGBS sit little changed to 2bp cheaper, with the super-long end providing the weakest zone on the curve, despite some pre-market expectations for flattening on the back of the combination of Tuesday’s price action in U.S. Tsys and the presence of super-long BoJ Rinban operations.

  • Swap payside flow seems to have aided the move a little, while a slightly firmer U.S. Tsy space has failed to provide any meaningful support.
  • JGB futures hit the lunch bell -7, oscillating within a tight range after respecting the contract’s overnight base shortly after the re-open.
  • BoJ Rinban operations generated the following offer cover ratios:
  • 1- to 3-Year: 3.08x (prev. 3.10x)
  • 3- to 5-Year: 1.75x (prev. 1.36x)
  • 25+-Year: 2.55x (prev. 2.28x)
  • We wouldn’t expect these cover ratios to generate much market impact.
  • JGBs didn’t really react to the latest round of North Korea missile launches.
  • Domestic headline flow has been dominated by Finance Minister Suzuki sounding a little more worried re: the impact of a softer JPY, with the currency outperforming its G10 FX peers in the wake of the comments and the North Korean missile test.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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