Futures At Tokyo Session Highs In the Afternoon Session, 40Y Supply Tomorrow

In the Tokyo afternoon session, JGB futures are sitting at a session high, +20 compared to settlement levels.

• Today the local calendar has been light, with Department Sales data due later. However, BOJ’s Governor Ueda will give a speech in Osaka at about 0830 BST, and Uchida will speak around an hour earlier.
• Local participants have ignored the slight cheapening in US tsys in the Asia-Pac session today, possibly focusing on the message contained in the BOJ’s ‘dovish hold’ on Friday ahead of today’s BOJ-speak. Cash US tsys are dealing flat to 3bps cheaper across major benchmarks.
• Cash JGBs are mixed, with yields 1.1bps lower (7-year) to 1.0bps higher (40-year). The benchmark 10-year yield is 1.1bps lower at 0.735% versus the cycle high of 0.756% set ahead of the BOJ policy decision on Friday. 40-year supply is due tomorrow.
• The swaps curve is richer out to the 20-year, with rates 0.7bp to 1.1bp lower. Swap spreads are generally tighter.
• Tomorrow the local calendar sees PPI Services data.