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Free AccessLong End Bid Dominates Tokyo Trade
JGB futures have recovered from lows during the Tokyo afternoon, last dealing +5. This comes after the contract found some poise alongside the wider core global FI space in the wake of the latest Australian CPI reading, although moves were limited.
- Cash JGBs have continued their early twist flattening, as the major benchmarks run 0.5bp cheaper to 5bp richer, with 20+-Year paper bid from the get go. A reminder that yesterday’s well-received 40-Year JGB auction has been a trigger for notable flattening of the wider JGB curve, with 40s now operating ~15bp shy of yesterday’s yield peak.
- The bid seems JGB centric, with swap spreads wider across the entire curve, while only 30- & 40-Year swap rates are (marginally) lower on the day.
- Both domestic and macro headline flow has been rather limited since the Tokyo open, leaving cross-market impetus at the fore.
- BlueBay Asset Management have noted that they maintain their notable short position in 10-Year JGBs, even in light of the recent rally/BoJ defence of its current YCC settings, with their CIO stating that “we have been looking for the Bank of Japan to signal a policy shift in September as inflation continues to rise with the yen trending weaker as policies diverge. This continues to be the case.”
- Looking ahead, 2-Year JGB supply headlines Thursday’s domestic docket.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.