Weakness Extends Further

Payside swap flow aids a fresh move lower in JGBs, with the majority of swap spreads widening and 10-Year swap rates above 1.00% for the first time in over a decade. The BoJ's emergency Rinban purchases, covering 1- to 25- Year paper is doing little to counter the move thus far, with cheapening extending post-announcement. JGB futures run 90 ticks lower on the day at typing, hovering a little off the recently registered session lows, while cash JGBs are flat to 3bp cheaper, with 10s looking further above the BoJ’s YCC cap. The market remains keen to test the BoJ’s will ahead of next week’s monetary policy meeting.