Softness Maintained, Paying Seen In Long End Swaps

JGB futures went into the lunch break 12 ticks below Friday's settlement levels, with the reflation theme remaining evident, allowing the contract to extend on its overnight losses. This has resulted in steepening of the cash JGB curve, although longer dated JGBs were only ~1.0bp cheaper on the day, with swap spreads widening as the longer end of the swap curve was subjected to payside pressure.

• The purchase sizes were left steady in the latest round of BoJ 1-10 Year Rinban operations, with the following over to cover ratios seen:
• 1-3 Year: 3.31x (prev. 3.72x)
• 3-5 Year: 3.14x (prev. 2.67x)
• 5-10 Year: 2.40x (prev. 2.62x)
• Elsewhere, Japan's preliminary Q4 GDP print was firmer than expected, with the private consumption, net exports and business spending components all topping expectations (with business spending the standout of the three).