Cash Bonds Slightly Mixed With A Flattening Bias, 40Y Supply Tomorrow

JGB futures are weaker but well off session cheaps, -9 compared to the settlement levels.

• Machine Tool Orders data is due later today, otherwise the local calendar has been light.
• (Bloomberg) The Bank of Japan should more clearly show its intention to normalize monetary policy, according to ruling party heavyweight Toshimitsu Motegi in remarks a week before the central bank meets to decide whether to raise interest rates. (See link)
• Cash US tsys are 1-2bps richer in today’s Asia-Pac session, ahead of Regional Fed and Existing Home Sales data and a $69bn 2Y Note auction.
• Cash JGBs are 1bp cheaper to 1bp richer across benchmarks. The benchmark 10-year yield is 0.8bp higher at 1.063% versus the cycle high of 1.108%.
• The 40-year yield is 0.2bp lower higher at 2.421%, 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.
• Swap rates are flat to 2bps lower, with the curve flatter. Swap spreads are tighter.
• Tomorrow, the local calendar will see Preliminary Jibun Bank PMIs alongside 40-year supply.