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JGBS: Richer With 40Y Leading After Strong Auction

JGBS
BulletAPACFixed Income BulletsJapanMarkets

JGB futures are stronger, +8 compared to settlement levels, but well off session bests.

  • Today’s move was all about US tsys. Cash US tsys are 6-10bps richer in today’s Asia-Pacific session, with a flattening bias, following yesterday’s holiday. The session has been marked by volatility, driven by reports that Trump suggested tariffs on Canada and Mexico might take effect on February 1. While gains were briefly pared, US tsys have since rebounded, trading near session bests.
  • Today’s local calendar was empty apart from 40-year supply.
  • Cash JGBs are 1-3bps richer across benchmarks, with the 40-year leading. The benchmark 10-year yield is 0.9bps lower at 1.191% versus the cycle high of 1.262%.
  • The issuance of 40-year bonds today was met with strong demand, with the actual high yield coming in notably below dealer expectations. According to a Bloomberg poll, the anticipated yield was 2.60%, compared to the realized yield of 2.57%. The auction’s cover ratio also improved, rising to 2.7518x from 2.2364x in the previous outing.
  • Swap rates are slightly higher. Swap spreads are wider.
  • Tomorrow, the local calendar will see BoJ Rinban Operations covering 1-25-year JGBs.
  • BoJ Policy Decision on Friday.
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JGB futures are stronger, +8 compared to settlement levels, but well off session bests.

  • Today’s move was all about US tsys. Cash US tsys are 6-10bps richer in today’s Asia-Pacific session, with a flattening bias, following yesterday’s holiday. The session has been marked by volatility, driven by reports that Trump suggested tariffs on Canada and Mexico might take effect on February 1. While gains were briefly pared, US tsys have since rebounded, trading near session bests.
  • Today’s local calendar was empty apart from 40-year supply.
  • Cash JGBs are 1-3bps richer across benchmarks, with the 40-year leading. The benchmark 10-year yield is 0.9bps lower at 1.191% versus the cycle high of 1.262%.
  • The issuance of 40-year bonds today was met with strong demand, with the actual high yield coming in notably below dealer expectations. According to a Bloomberg poll, the anticipated yield was 2.60%, compared to the realized yield of 2.57%. The auction’s cover ratio also improved, rising to 2.7518x from 2.2364x in the previous outing.
  • Swap rates are slightly higher. Swap spreads are wider.
  • Tomorrow, the local calendar will see BoJ Rinban Operations covering 1-25-year JGBs.
  • BoJ Policy Decision on Friday.