Unscheduled BoJ Purchase Operations Trigger Limited Rally

JGB futures move through their early Tokyo highs as the BoJ delivers a semi-expected round of unscheduled JGB purchases, offering to buy Y150bn of 5- to 10-Year JGBs and Y100bn of 10- to 25-Year JGBS, although the rally was limited in the grander scheme of things with the contract failing to get anywhere near neutral before paring back.

• Cash JGBs run ~1bp cheaper across the curve when compare to yesterday’s closing levels, with the super-long end’s early weakness fading a touch on the back of the operations.
• It would seem that the market is telling the BoJ that today’s move is not a gamechanger, as the Bank remains the last dove in the room from a global monetary policy perspective and participants remain willing to test its resolve (albeit to a lower degree vs. what was seen in June) given global developments.