40-Year Supply Absorbed, Ranges Tight

There was nothing in the way of reaction seen in futures in the wake of the latest round of JGB supply, with super-long paper firming a touch in cash trade. The high yield witnessed at the 40-Year JGB auction came in 0.5bp below broader expectations (per the BBG dealer poll), with the cover ratio holding steady as the percentage of the paper allotted at the high yield moderated. We highlighted the outright attractiveness of the line ahead of supply, although there was a lack of relative value appeal.

• Futures last +5, after edging away from late overnight session levels at the Tokyo re-open, as local participants reacted to the modest cheapening that was seen in U.S. Tsys in the latter rounds of NY dealing. The major cash benchmarks run little changed to ~1.0bp richer on the day at typing.
• The latest round of weekly international security flow data revealed a solid round of net buying of Japanese bonds on the part of foreign investors for the second consecutive week.
• Elsewhere, the Nikkei reported that Japan will extend its employment subsidy program to the end of July.
• Friday's local economic docket will be headlined by the monthly labour market report and Tokyo CPI readings. We will also see the latest round of BoJ Rinban operations covering 3- to 10-Year JGBs.