Futures Are Holding Uptick, Mid-Range, 2Y Supply Tomorrow

JGB futures are holding in the middle of the Tokyo session range, +3 compared to the settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined BOJ Minutes for the July meeting. Of note, many members said hitting the BOJ’s inflation target was not yet in sight.
• Leading and Coincident Indices and Machine Orders are due soon.
• The cash JGBs are dealing mixed, with yields 1.4bps higher to 0.4bp lower. The benchmark 10-year yield is 0.2bp lower at 0.739%, above BOJ's YCC soft limit of 0.50% but below its hard limit of 1.0%. It is also lower than the cycle high of 0.756%, set prior to the recent BOJ decision.
• The swaps curve has twist-steepened, pivoting at the 7s, with rates 0.5bp lower to 1.4bps higher. Swap spreads are wider beyond the 3-year.
• Tomorrow the local calendar sees International Investment Flow data, along with 2-year supply.
• Later today sees US Durable Goods. Fedspeak from Gov Bowman and Minneapolis Fed President Kashkari will cross. There is also 5-year US tsy supply.