Bear-Flattening, Light Calendar

At the Tokyo lunch break, JGB futures are holding cheaper, -29 compared to the settlement levels, marginally above the session’s worst level.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Flash Jibun Bank PMIs. The calendar also sees Tertiary Industry Index data later.
• Cash US tsys are sitting 3-4bps cheaper so far in the Asia-Pac session, with local participants profit-taking following an assertive post-FOMC rally.
• (Bloomberg) JGB futures are heading lower in a delayed reaction to Thursday’s sloppy 20-year auction. This tepid demand will become a negative theme for JGBs into Bank of Japan meetings until the central bank finally tightens policy. (See link)
• The cash JGB curve has bear-flattened, with yields flat to 3.2bps higher (3-year). The benchmark 10-year yield is 1.9bps higher at 0.693%. The 20-year is 1.7bps higher at 1.42% versus yesterday’s pre-auction low of 1.36%.
• Swaps are 1-2bps cheaper across maturities, apart from the 30-year (0.8bps lower).