Long End Continues Yesterday’s Post-20Y Supply Rally

At the Tokyo lunch break, JGB futures are slightly weaker, -5 compared to the settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of Trade Balance data. Machine Tool Orders data is due later, along with the results of today’s BoJ Rinban operations covering 1-10-year JGBs.
• According to MNI’s technicals team, recent weakness in JGB futures resulted in a low print of 145.86, on Jan 26. A stronger reversal is required to signal the end of the recent corrective phase. A resumption of weakness would potentially open 144.60 support. On the upside, the bull trigger has been defined at 147.74, the mid-January high. A break would resume the uptrend. MA studies remain in a bull-mode set-up, highlighting an uptrend.
• Cash JGBs are dealing mixed, with yields slightly higher out to the 10-year and 1-3bps lower beyond. The benchmark 20-year yield is 1.7bps at 1.472%, extending yesterday’s post-supply rally.
• The swaps curve has slightly bull-flattened, with rates flat to 1bp lower. Swap spreads are mostly wider.