Twist Steepening Develops

JGB futures operate just shy of their Tokyo morning peak after the breach of overnight session highs, with core global FI markets in a bit of a holding pattern over the last couple of hours. The offer to cover ratios covering today’s BoJ Rinban operations were subdued to average (1.95-2.25x) so won’t be generating much in the way of tangible market reaction. Elsewhere, PM Kishida has seemingly instructed the LDP to compile a package of additional measures to further curb the burden of the recent run of inflation. JGB futures are +16, while cash JGBs are 2bp richer to 1.5bp cheaper, twist steepening, with a pivot around 10s (which operate in a narrow range between 0.50-0.51%, just through the peak of the BoJ’s YCC band). 7s continue to outperform on the bid in futures, while some mild weakness has developed in the long end.