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Local Data, Speculation On MonPol & BoJ Inaction Weigh

JGBS

JGBs have been on the backfoot throughout Tokyo trade, with futures operating a little off worst levels into the bell, -13, after more than erasing the post-Tokyo uptick that was witnessed during the final overnight session of last week.

  • Cash JGBs are flat to 3.5bp cheaper with the long end leading the weakness, aided by payside swap flow in 30+-Year paper, which saw swap spreads in that zone widen. 10-Year yields were limited by their proximity to the upper boundary of the BoJ’s YCC settings.
  • Post-holiday trade was seemingly shaped by participants placing more focus on domestic factors, in the form of continued speculation re: the potential for a further BoJ policy tweak (hence the super-long swap spread widening) and a firmer than expected core CPI reading out of Tokyo (alongside as expected upticks in both the headline and core-core readings).
  • A lack of off-schedule BoJ purchases probably promoted further cheapening as the day wore on.
  • Note that the latest 3-month Bill auction was cancelled owing to partial unavailability of the BOJ-NET system.
  • 30-Year JGB supply headlines tomorrow’s domestic docket.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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