Cheaper & Near The Session’s Worst Levels At Lunch

At the Tokyo lunch break, JGB futures were weaker and near Tokyo session lows, -18 compared to the settlement levels.

• The local calendar is empty today, ahead of Retail Sales and weekly International Investment Flow data tomorrow. Thursday also sees 2-year supply.
• Cash JGBs are dealing mixed, with yield changes bounded by -0.4bp (4-year) to +2.6bps (40-year). The benchmark 10-year yield is 1bp higher at 1.014% versus the cycle high of 1.101%. This is the first time the 10-year yield has pushed above 1% since June 12 as traders continue to mull the central bank’s plan to cut its debt purchases.
• “Central bank watchers see monthly bond buying being reduced to about ¥5 trillion from the current ¥6 trillion starting in August, according to the median estimate of analysts. In two years, they expect it to be scaled down to ¥3 trillion.” “The Bank of Japan will hold meetings over July 9-10 to hear views from market participants on the future direction of its government bond purchases.” (per BBG)
• The swaps curve has bear-steepened, with rates flat to 5bps higher. Swap spreads are mostly wider.