Bear-Steepening Still In Play But Yields Off Highs

At the Tokyo lunch break, JGB futures are cheaper, -25 compared to settlement levels, but slightly above the Tokyo session’s worst level.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Money Stock data and the Q4 BSI Survey for Industries. Flash November Machine Tool Orders are due later.
• JGB futures slid sharply Friday, refuting the recent bullish bias and returning prices to support, according to MNI’s technicals team. 143.44, the October 31 low, mark key support and a medium-term bear trigger. Initial support is at 145.53, the November 27 low. Any return higher will meet resistance at 147.27 and above at 148.74.
• US tsys are holding cheaper in the Asia-Pac session today, however, ranges remain narrow, and the downtick has not yet followed through. Friday's post-NFP lows remain well intact. Little meaningful macro newsflow has crossed today. Cash tsys sit 1-2bps cheaper across the major benchmarks, and light bear steepening is apparent.
• The cash JGB curve bear-steepens, with yields 0.3bp to 3.7bps higher. The benchmark 10-year yield is 2.2bps higher at 0.788% versus last week’s rally low of 0.622%.
• Swap rates are little changed across the curve out to the 30-year. The 40-year rate is 2.5bps higher at 1.61%. Swap spreads are tighter.