Morning Moves Hold Into Close, Curve Twist Flattens

Cross-market-driven flows observed across the wider core global FI space were in play in JGB futures, which extended on their marginal overnight cheapening during the Tokyo morning, before bouncing. The contract has come under light pressure into the bell and is -20, registering fresh session lows in the process.

• •Cash JGBs are 1.5bp cheaper to 2bp richer, with 20s outperforming even with the presence of a tepidly received round of 20-Year JGB supply, as the curve twist flattens. 10-Year JGB yields are showing through the peak of the BoJ’s YCC cap at present.
• •Domestic headline flow was fairly subdued, with Finance Minister Suzuki going over well-trodden rhetoric re: the FX market, while soon-to-be departing BoJ Governor Kuroda reaffirmed the Bank’s view on inflation.
• •Services PPI data and a speech from BoJ’s Tamura headlines the local docket on Wednesday. Look out for off-schedule Rinban purchases if the upper end of the BoJ’s YCC parameters continues to be breached.