Futures Away From Overnight Peak, But Still Higher Than Tokyo Close

The broader defensive tone supported JGB futures in overnight trade, although the contract pulled back from best levels to close +9 vs. Tokyo settlement levels, with the dip from the overnight peak coming alongside a similar move in U.S. Tsys. Technical resistance in the form of the July 7 high (152.59) was not tested.

• Desks continue to question whether 10s will test/break through the 0% yield level after printing as low as 0.01% (again) on Monday, with most suggesting that a break back into negative territory is somewhat unlikely.
• Japan's government left its monthly economic assessment unchanged for a third straight month when it released the latest report on the matter on Monday, but upped its assessment of business conditions as the economy continues to recover from the pandemic.
• Local headlines continue to focus on the COVID situation, with NHK suggesting that Hokkaido prefecture will seek "quasi-virus emergency measures."
• National CPI data headlines the local docket on Tuesday, with a liquidity enhancement auction for off-the-run JGBs with 5- to 15.5-Years until maturity also due.