10YY At 1% Ahead Of Rinban Operations

In Tokyo morning trade, JGB futures are holding an uptick, +1 compared to settlement levels, after today’s local data.

• Offshore investors maintained net purchases of local bonds last week. However, the pace of inflows slowed. We had ¥427.4bn coming into local bonds. This was the first back-to-back inflows into local bonds since the mid-March period. In terms of outbound flows from local investors, we had a surge in purchases of offshore bonds (¥2192.2bn). This was the largest weekly purchase since late Dec last year.
• May’s Jibun Bank Preliminary PMIs printed: Mfg rises to 50.5 from 49.6; Services falls to 53.6 from 54.3; and Composite rises to 52.4 from 52.3.
• Cash US tsys are little changed in today’s Asia-Pac session after yesterday’s modest cheapening.
• The cash JGB curve has twist-steepened, pivoting at the 20s, with yields 1bp lower (10-year) to 1.2bp higher (30-year). The benchmark 10-year yield is at 0.999% after setting a fresh cycle high of 1.011% yesterday.
• The BoJ will conduct Rinban Operations covering 1-10-year JGBs today. Investors will pay close attention to these operations after the benchmark 10-year yield at 1% for the first time since the bank ramped up unprecedented stimulus measures in 2013.
• Swap rates are flat to 1bp higher, with swap spreads mostly wider.