Cash Bonds Slightly Cheaper Across Benchmarks, BoJ Riban Operations Due

In Tokyo morning trade, JGB futures are holding weaker, -22 compared to settlement levels.

• Today, the local calendar will see Machine Tool Orders data alongside BoJ Rinban Operations covering 1-10-year JGBs.
• (Bloomberg) Japan’s ruling Liberal Democratic Party Secretary-General Toshimitsu Motegi says that the Bank of Japan should articulate its normalization policy more clearly, including its consideration of raising rates gradually, Nikkei reports citing a speech in Tokyo on Mon. “It is clear that an excessively weak yen is negative for the Japanese economy,” Motegi says, since it could lead to prolonged higher prices. He also said Japanese companies will be able to “adequately handle” monetary policy tightening.
• Cash JGBs are 1-2bps cheaper across benchmarks. The benchmark 10-year yield is 1.6bps higher at 1.071% versus the cycle high of 1.108%.
• The 40-year yield is 1.6bps higher at 2.438%, ahead of tomorrow’s supply and a week ahead of the upcoming BoJ’s policy decision. Although this 40-year sale is set for a higher outright yield than at the May auction (high yield of 2.27%), secondary pricing hasn’t yet reached the 2.5% area which is said to be a target zone for institutional investors.
• Swaps are slightly mixed. Swap spreads are also mixed.