Futures At Session Highs At Lunch

At the Tokyo lunch break, JGB futures are sharply higher and at session highs, +40 compared to the settlement levels.

• Outside of the previously outlined Labour and Real Cash Earnings and Jibun Bank PMIs, there hasn't been much in the way of domestic drivers to flag.
• According to MNI’s technicals team, a bear trend in JGB futures has paused, with prices recovering after the latest bout of weakness. The contract traded through key support at 143.44, the Nov 1 low, exposing 142.13 and below.
• A stronger reversal higher is required to signal the end of the recent downward phase. Key resistance is at 145.95, the Mar 28 high. A break would signal scope for a climb towards the bull trigger at 147.74, the mid-January high.
• Cash US tsys are ~1bp cheaper in today’s Asia-Pac session. The US calendar today will see MBA Mortgage Applications, ADP Employment Change and S&P Global US PMI & ISM Services Index.
• Cash JGBs are richer across benchmarks, with yields flat (1-year) to 4.1bps lower (5-year). The benchmark 10-year yield is 3bps lower at 1.00% versus the cycle high of 1.101% set last week.
• Swaps are richer apart from the 20-30-year zone, with rates 3bps lower to 1bp higher. Swap spreads are mostly wider.