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Will Tokyo Dealers Add To The Pressure?

JGBS

JGB futures shed 8 ticks in the final overnight trading session of last week, as weakness for U.S. Tsys spilled over into the space. This allowed the contract to extend the pullback from the early Tokyo highs witnessed during Friday's main session.

  • It will be interesting to see if local participants provide fresh pressure this morning, given the weakness seen in core fixed income trade in the early hours of this week. Technical support does not come in until the current Oct low (151.18)
  • A reminder that our latest insight piece flagged our policy team's understanding that "lingering shortages of imported parts and semiconductors for Japanese automobile makers could lead the Bank of Japan to review its long-running language that the economy will pick up "as a trend." On a similar note, Friday saw a RTRS sources piece note that "the Bank of Japan is expected to downgrade its economic growth forecast for the current fiscal year as supply constraints caused by Asian factory shutdowns cripple output and exports… The BOJ is also likely to trim its consumer inflation forecast for the year ending in March, five sources said, which would reinforce market expectations it will lag behind other central banks in whittling down crisis-mode stimulus measures."
  • There is a lack of risk events evident when it comes to Monday's local economic docket.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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