Cash Bonds Modestly Cheaper Ahead Of 10Y Supply

In Tokyo morning trade, JGB futures are holding in negative territory, -23 compared to settlement levels.

• Japan’s monetary base rose 0.6% in June from a year ago.
• (Bloomberg) “Japan’s super-long bond issuance looks set to drop, but it’s a case where less still means more than the market may be able to handle. The government appears to be striving to calm down a market that’s wracked by rising yields, and is considering decreasing sales of longer-dated debt and boosting offerings of shorter maturities. The problem is that the elevated risk of large capital losses for the longest bonds means that the supply of those securities will have a greater risk-adjusted impact on the market.” (See link)
• Cash US tsys are dealing slightly richer in today's Asia-Pac session after yesterday's bear-steepening.
• The US calendar is light today ahead of ADP private employment, ISM services, and weekly claims on Wednesday, the 4th of July holiday on Thursday and June employment data on Friday.
• Cash JGBs are flat to 2bps 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%.
• Swap rates are little changed out to the 30-year, 1bp higher beyond. Swap spreads are mostly tighter.