Downtick At Lunch, Rinban Operations Could Generate Pressure For 10-25-Years

At the Tokyo lunch break, JGB futures are slightly weaker at 148.51, -5 compared to settlement levels as US tsy futures sit unchanged in Asia-Pac trade. Cash tsys are closed today for the Memorial Day holiday.

• Cash JGBs are trading mixed in early Tokyo trade with yields ranging from +0.7bp (7-year) to -0.7bp (40-year). The benchmark 10-year yield is 0.5bp higher at 0.426%. The benchmark 2-year yield, ahead of tomorrow's 2-year supply, is trading 0.1bp lower at -0.064%, showing no sign of concession on the curve.
• This morning’s BoJ Rinban operations saw slightly lower cover ratios apart from the 10-25-year operation (3-5-year: 1.34x, 5-10-year: 2.37x, 10-25-year: 2.36x and 25-year+: 2.27x). Spreads were positive for all but the 3-5year operation. Overall, the results could generate some slight pressure in early rounds of the Tokyo afternoon session for the 10-25-year bucket.
• The swap curve has twist steepened in early Tokyo trade with rates -0.2bp to +0.8bp and a pivot point at the 4-year zone. Swap spreads are wider beyond the 3-year.
• On the local data front, we have later today final March readings for the coincident and leading indices, with neither release likely to move sentiment.