Free Trial

Swap Payside Flow Helps Futures Unwind Overnight Gains

JGBS

JGB futures have followed the wider core global fixed income space away from overnight highs, with the contract up a mere 7 ticks as we work towards the Tokyo close (40 off the overnight session peak), with domestic equities moving higher and participants perhaps trimming short-term long positions after the rally from cycle cheaps.

  • Cash JGBs sit 0.5bp richer to 1.0bp cheaper across the curve, with the curve steeoening as 30+-Year paper cheapens. Note that swaps lagged the early catch up rally observed in the cash JGB space, while the swap spread widening persisted as we moved through Tokyo trade as swap payside flows came to the fore, potentially aiding the cheapening/steepening themes.
  • A quick reminder that our policy team have flagged their understanding that the Bank of Japan may be leaning towards taking its overnight rate out of negative territory rather than raising the upper limit of its yield control range in response to rising inflation and to ease speculative pressure as other major central banks tighten policy.
  • There was little in the way of meaningful domestic headlines to impact the space, with continued news flow surrounding the Sakhalin 2 situation and impending upper house elections providing no real impetus for markets.
  • Looking ahead, 10-Year JGB supply and wage data headline domestic matters tomorrow.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.