Off Worst Levels But Holding Cheaper

Even JGBs haven’t been able to shake off the impact of cross-market-derived flows and have moved away from early Tokyo cheaps to print -22 at typing, in line with late overnight session levels after spill over from the U.S. Tsy space applied pressure outside of Tokyo hours. Meanwhile, cash JGBs are little changed to 2bp cheaper across the curve, with 10s limited by their proximity of the upper boundary of the BoJ’s YCC settings.

• Local data flow generated a slightly narrower than expected trade deficit for January (although we still saw the widest headline trade deficit on record), alongside softer than expected core machine orders, although that didn’t move the needle for the space.