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Wider Impulse Driving The Space

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There has been a lack of domestic input when it comes to today’s JGB market moves, with wider cross-asset flows at the fore.

  • The early bout of risk-off flows linked to COVID headlines covering the Chinese city of Shanghai & North Korea, and perhaps some worry linked to the Chinese property sector given Sunac’s warning re: its ability to service its immediate interest payments on debt requirements, provided some support, before the wider risk-off impulse faded.
  • JGB futures pushed through their overnight highs before fading from best levels and then turning bid again. The contract is last +12.
  • Cash JGBs are little changed to 1bp richer across the curve. 30+-Year paper cheapened in early afternoon dealing, post-supply, after outperforming during the Tokyo morning, but has since regained some poise.
  • In terms of specifics, the latest 30-Year JGB auction was soft on the pricing side, with the low price softer than wider expectations (99.40 vs. the BBG dealer median of 99.60), while the price tail widened vs. the previous round of 30-Year JGB supply. Elsewhere, the cover ratio was little changed vs. the previous round of 30-Year JGB supply, holding below the 6-auction average of 3.32x. Ongoing market vol. & the risk of fresh offshore FI-led cheapening is seemingly keeping some prospective bidders sidelined at present, even with yields hovering around multi-year highs.
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There has been a lack of domestic input when it comes to today’s JGB market moves, with wider cross-asset flows at the fore.

  • The early bout of risk-off flows linked to COVID headlines covering the Chinese city of Shanghai & North Korea, and perhaps some worry linked to the Chinese property sector given Sunac’s warning re: its ability to service its immediate interest payments on debt requirements, provided some support, before the wider risk-off impulse faded.
  • JGB futures pushed through their overnight highs before fading from best levels and then turning bid again. The contract is last +12.
  • Cash JGBs are little changed to 1bp richer across the curve. 30+-Year paper cheapened in early afternoon dealing, post-supply, after outperforming during the Tokyo morning, but has since regained some poise.
  • In terms of specifics, the latest 30-Year JGB auction was soft on the pricing side, with the low price softer than wider expectations (99.40 vs. the BBG dealer median of 99.60), while the price tail widened vs. the previous round of 30-Year JGB supply. Elsewhere, the cover ratio was little changed vs. the previous round of 30-Year JGB supply, holding below the 6-auction average of 3.32x. Ongoing market vol. & the risk of fresh offshore FI-led cheapening is seemingly keeping some prospective bidders sidelined at present, even with yields hovering around multi-year highs.