Richer, But Back From Best Levels

Tokyo morning trade has seen JGBs track the wider risk impulse, initially bid on the back of the widespread risk aversion observed elsewhere, before the move pulled back from extremes as the early momentum faded a little. Still, JGB futures are comfortably above overnight session levels, +15 last. Meanwhile, cash JGBs run 0.5-2.0bp richer on the day, with a fairly parallel shift observed from the 7-Year point to further out the curve, as flattening remains in play, building on the theme observed in the last couple of sessions after the pronounced steepening witnessed in early ’22. There hasn’t been much in the way of meaningful domestic news flow. Services PPI data met broader expectations, while Finance Minister Suzuki mentioned the need to monitor the impact of overseas bond markets on JGBs. A liquidity enhancement auction for 5- to 15.5-Year off-the-run JGBs headlines the local docket this afternoon.