Reinvestment Flows Support ACGBs, JGBs Gain Despite Firmer Equities

Limited news and data flow translated kept T-Notes rangebound overnight. The contract inched higher at some point, but was capped by Thursday's high of 132-10. It last changes hands +0-02+ at 132-08+, just above the mid-point of the Asia-Pac session's range. Cash curve flattened at the margin, with yields last seen +0.2bp to -1.2bp, even as e-minis remain elevated. Eurodollar futures trade unch. to +1.0 tick through the reds. Going forward, focus in the U.S. turns to retail sales, industrial output, U. of Mich. Survey & comments form Fed's Kaplan.

• JGB futures jumped at the re-open and remained afloat thereafter, even as local equity benchmarks registered healthy gains. The contract trades at 151.36, 11 ticks above last settlement & hitting session highs. Cash JGB yields sit lower, curve runs a tad flatter with 40s outperforming. The BoJ offered to buy 1-10 Year JGBs, leaving purchase sizes unch. across all baskets. Breakdown data revealed downticks in offer/cover ratios in today's Rinban ops. Japan's Covid-19 response czar said that the island of Hokkaido as well as Hiroshima and Okayama prefectures will be added to the declaration of Covid-19 emergency through the end of the month. PM Suga holds a presser on the matter at 8pm JST.
• ACGB space likely drew some support from reinvestment flows, ahead of Saturday's redemption of A$26bn in ACGB May '21. Cash ACGB curve bull flattened, albeit 10-year yield rose the most and last sits at 1.784%. YM trades +0.5, with XM +2.5 at typing, after sticking to tight ranges in Sydney trade. Bills last seen -1 to +1 tick through the reds. The AOFM auctioned A$1.0bn of ACGB 21 Apr '26 and bid/cover ratio fell to 3.96x from 5.92x, although the previous auction of the bond was held in Jun 2020. The space looked through the issuance slate for next week.