Steepening Pressure Extends

JGBs have seen an extension of the steepening flagged earlier, with the super-long end continuing to come under pressure on the combination of the spill over from wider pressure observed in global core FI markets on Thursday and a lack of BoJ purchases in the 25+Year zone (despite upsized scheduled purchases and one round of unscheduled purchases elsewhere on the curve today).

• Cash JGBs run 1.0bp richer to 4.5bp cheaper across the curve as a result, twist steepening.
• Meanwhile JGB futures hit the lunch break -4, coiling within the confines of the overnight session range.
• Participants were not impressed by today’s round of Rinban operations, while local policymakers have stuck to comments on the JPY, which haven’t provided any fresh, meaningful information.
• The BoJ Rinban operations saw relatively normal offer/cover ratios (1- to 3-Year: 3.10x, 3- to 5-Year: 1.89, 5- to 10-Year: 3.00x, 10- to 25-Year: 1.58x).