Cheaper Ahead Of 5Y Auction Results

At the Tokyo lunch break, JGB futures are weaker and near session cheaps, -10 compared to settlement levels.

• Outside of the previously outlined international investment flow data, there hasn't been much in the way of domestic drivers to flag.
• Cash US tsys are 2-3bps cheaper in today’s Asia-Pac session after yesterday’s holiday.
• The cash JGB curve has twist-flattened, pivoting at the 40s, with yield movements bounded by +/- 2bps. The benchmark 10-year yield is 1.6bp higher at 0.947% versus the cycle high of 1.101%. The 5-year yield is 0.9bp higher at 0.519% ahead of today’s supply.
• Today's auction comes on the heels of a strong 10-year JGB auction in June. The low price beat wider expectations, the tail shortened, and the cover ratio increased versus May’s auction.
• Today’s issuance also comes on the back news that Japan’s Ministry of Finance is weighing a plan to shift more of its bond issuance to shorter maturities. (See BBG link)
• Swap rates are slightly higher out to the 30-year and 5bps higher beyond. Swap spreads are tighter out to the 10-year zone and tighter beyond.