JGBS: Richer, Coalition Talks in Focus, 2/30 Curve Flatter Approaches Resistance
In Tokyo morning trade, JGB futures are sharply stronger, +42 compared to settlement levels.
- The market appears to be watching for developments in talks over forming a coalition government.
- "The Liberal Democratic Party and the Japan Innovation Party confirmed they are on the same page on major policy items, but one major sticking point remains in place: reforms on political funding rules." via BBG from late yesterday.
- Offshore investors continued to buy local bonds after strong inflows in the prior week. Still, aggregate inflows are only marginally positive for recent months.
- In terms of outbound Japan flows, we saw local investors buying bonds, although only partially reversed the previous week's net selling. Global bond returns have firmed this week, given downside in US Tsy yields (break 4.00% on the 10yr).
- Cash US tsys are 1-2bps richer in today’s Asia-Pac session after yesterday’s solid gains.
- Cash JGBs are 2-4bps richer across benchmarks, with the futures linked 7-year leading.
- 2/30 yield curve is closing in on near support around 220bps. (see chart)
- Swap rates are 3bps lower to 1bp higher, with a steeper curve.
- BOJ Deputy Governor Uchida will gve a speech later today.
Bloomberg Finance LP
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