Little Changed To A Touch Richer, Off Best Levels

Little to really add to our previous commentary. JGBs sit flat to 1.5bp richer across the curve, with some light outperformance in the super-long end, while JGB futures were +13 at the lunch bell.

• This came after the early adjustment richer moderated on the back of BoJ board member Tamura’s comments re: the need for a monetary policy framework review (flushed out earlier).
• Later in the morning BoJ Deputy Governor Amamiya outlined the BoJ’s accounting framework re: JGB holdings in front of parliament, while stressing that any paper losses incurred on its holdings will not impact the Bank’s ability to conduct monetary policy.
• We also heard from BoJ Governor Kuroda, who reiterated already heavily-discussed points re: the Japanese economic outlook.
• BoJ Rinban operations generated the following offer/cover ratios:
• 1- to 3-Year JGBs: 2.35x (prev. 2.26x)
• 3- to 5-Year JGBs: 1.66x (prev. 1.83x)
• 25+-Year JGBs: 1.53x (prev. 2.54x)
• These cover levels may provide some incremental support during early afternoon trade, but it’s hard to say that with any conviction given the pull away from best levels witnessed this morning.