Cash Bonds Cheaper Ahead Of 10Y Supply Results

At the Tokyo lunch break, JGB futures are holding near session lows, -21 compared to the settlement levels.

• Outside of the previously outlined Monetary Base data, there hasn't been much in the way of domestic drivers to flag.
• According to MNI’s technicals team, futures faded into the tail-end of last week, putting pressure on nearby support and prompting a poor weekly close. The break lower from here has seen 142.85 - the late May low - give way, with the 142.06 1.0% 10-DMA envelope and 142.00 handle and 141.65 further out - a Fibonacci projection. Key resistance remains at 145.95, the Mar 28 high, off which prices have faded into mid-week.
• Cash US tsys are dealing 1-2bps richer in today's Asia-Pac session after yesterday's bear-steepening.
• Cash JGBs are flat to 3bps cheaper across benchmarks, with the belly underperforming ahead of today’s 10-year supply. The benchmark 10-year yield is 1.9bps higher at 1.080% versus the cycle high of 1.101%.
• The 10-year auction held last month went well, with the low price beating wider expectations, the tail shortening and the cover ratio rising to 3.662x.
• It's also notable that the relative affordability of 10-year JGBs compared to futures, as indicated by the spread between the 7- and 10-year JGBs, is currently around its highest point since 2013.
• Swap rates are little changed.