10-Year Futures Rally, 5-Year Auction Eyed Today

Benchmark JGB futures have advanced from the off, with spillover from the overnight upswing in U.S. Tsys facilitating the move. Gains were extended after the Tokyo open, as the Nikkei 225 started in negative territory, despite upticks in U.S. e-minis.

• Japan 10-Year swap rates have extended their retreat from recent multi-year highs this morning and last sits at 0.54%, as bets for an imminent reversal of the BoJ's ultra-dovish monetary policy settings have been trimmed ahead of tomorrow's meeting.
• The upsizing of the purchase sizes in a scheduled round of the BoJ's Rinban operations yesterday reaffirmed virtually unanimous expectations of no change to the central bank's policy stance this week.
• JGB futures last trade at 148.67, up 35 ticks versus prior settlement. Cash JGB yields are broadly lower (save for 10s), curve runs flatter. The yield on 10-Year JGBs remains just above the 0.25% cap imposed as part of the BoJ's yield curve control.
• The MoF will auction 3-Month Bills and 2-Year JGBs today.