Good morning from Europe!

JGB futures experienced a slight boost today following the BOJ’s unexpected buying operation. However, the overall trajectory remains on track towards this year’s lows. Bond bears, who are betting against bonds, appear unfazed by the BOJ’s 5-year loan operation, as history has shown that such actions provide only temporary relief for long-end JGBs.

Despite the central bank’s persistent 5-year operations, 10-year yields have continued to climb. Interestingly, even the 5-year rate now exceeds the levels seen in late January when banks were able to secure a spread of 3 bps from BOJ loans.

Chart 1: Open Market Operations, Bank of Japan