A Touch Steeper, 10-Year Supply Coming Up

Futures coiled during the Tokyo morning, failing to move notably away from late overnight levels, hitting the lunch bell -6 as a result. The curve saw some modest steepening pressure, with the major benchmarks running little changed to ~1bp cheaper on the day. The 20+-Year zone provided the weakest point on the curve, aided by the overnight cheapening in core FI markets, while the lack of relative BoJ control in this area of the curve promoted underperformance relative to shorter dated paper.

• 10-Year JGB supply headlines domestic matters this afternoon. There hasn’t been anything in the way of meaningful pre-auction concession (as we suggested may be the case pre-market), with 10s nearing the upper end of the BoJ’s permitted -/+0.25% yield trading band (last 0.24%).
• Chief Cabinet Secretary Matsuno confirmed the desire of the government to lift the Japanese average wage to Y1,000 per hour, as was reported in the local press pre-market.
• BoJ board member Adachi failed to unveil anything in the way of meaningful fresh information in his latest address.
• On the wider issuance front, Indonesia priced Y81bn of samurai bonds, with maturities of 3-, 5-, 7- & 10-Years.