Steeper With Lack Of Demand Evident In Longer End

Cash JGBs run flat to ~5bp cheaper, with the super-long end struggling despite the presence of BoJ Rinban operations in the 25+-Year zone and even after the U.S. Tsy curve twist flattened on Tuesday.

• Participants may have been exhibiting increased caution ahead of the impending FOMC decision, as yesterday’s cheapening in super long paper extended, with wider FI market flows also eyed.
• Futures were -8 at the bell, with the contract’s overnight low giving way as wider core global FI markets cheapened as Asia-Pac dealing wore on, before the contract corrected from Tokyo lows into the bell.
• Local headline flow saw Finance Minister Suzuki sound a little more worried re: the impact of a weaker JPY, while BoJ Governor Kuroda reiterated the need for the BoJ to persist with its current monetary policy settings, although he did concede that YCC settings may need to be altered at some point down the line.
• BoJ Rinban operations covering 1- to 5- & 25+-Year JGBs had no real impact on the space, with relatively vanilla offer/cover ratios unearthed in the details.
• Looking ahead, Thursday’s local docket will see the latest batch of weekly international securities flow data cross.