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Tight Session, 10s Go Smoothly

JGBS

Futures coiled during Tokyo dealing, failing to move notably away from late overnight levels, last -5 a touch above late overnight session levels. The JGB curve saw some modest steepening pressure, with the major benchmarks running little changed to ~1bp cheaper on the day. The 20+-Year zone provided the weakest point on the curve, aided by the overnight cheapening in core FI markets, while the lack of relative BoJ control in this area of the curve promoted underperformance vs. shorter dated paper.

  • 10-Year JGB supply saw smooth digestion, with the low price matching wider expectations (as proxied by the BBG dealer poll), tail holding tight and cover ratio holding comfortably above the auction average (which stood at 3.75x), albeit back from last month’s multi-year high. BoJ assurances were seemingly enough to result in healthy demand when it comes to 10-Year JGB supply (it also prevented anything in the way of pre-auction concession, with 10-Year JGB yields 1bp of the upper limit of the -/+0.25% band, limiting weakness in paper out to 10s).
  • On the wider issuance front, Indonesia priced Y81bn of samurai bonds, with maturities of 3-, 5-, 7- & 10-Years.
  • Japanese Chief Cabinet Secretary Matsuno confirmed the desire of the government to lift the Japanese average wage to Y1,000 per hour, as was reported in the local press pre-market.
  • BoJ board member Adachi failed to unveil anything in the way of meaningful fresh information in his latest address.
  • The latest round of BoJ Rinban operations headline the domestic docket on Friday.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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