U.S. Tsys & Long End Swaps Apply Some Pressure In the Afternoon

The wings of the cash JGB curve firmed during the Tokyo morning, while the 3- to 10-Year zone of the curve saw some modest cheapening. It was once again the long end of the curve that outperformed, with super-long paper firming by ~3.0bp vs. yesterday's closing levels during morning trade, before that strength unwound during the early part of the Tokyo afternoon as local equity markets firmed further and U.S. Tsys softened. JGB futures (M1) finished 6 ticks lower on the day. The latest round of BoJ Rinban ops saw the respective purchase sizes of each bucket left at unchanged levels, while the offer to cover ratios revealed little in the way of notable selling pressure ahead of next week's BoJ decision.

• Longer dated swap spreads widened, during the afternoon, with paying there potentially leading to some long end weakness for JGBs.
• The BoJ decision and results of its monetary policy review headline the local docket next week.