Futures Cheapen After Early Tick Higher

An initial, modest show higher has given way to weakness in JGB futures, with a lack of meaningful headline flow apparent, meaning that there hasn’t been much in the way of an overt driver for the move (outside potential spill over from the weakness in U.S. Tsys during the second half of NY trade, which took JGB futures back to near neutral levels at the close of post-Tokyo dealing).

• JGB futures now sit -12, while cash JGBs are 1bp richer to 1.5bp cheaper across the curve, with the belly representing the only zone of weakness, as the wings hold moderately firmer on the day (pointing to a futures driven move in the belly).
• Swap flows have likely aided the move in futures, with some steepening on that curve resulting in swap spread widening across all tenors.
• Local headline flow remains light, with Finance Minister Suzuki offering little new as he discussed fiscal matters and touched on the BoJ under Kuroda’s tenure. Both Suzuki and Chief Cabinet Secretary Matsuno have pointed to hope that the Bank will continue to deploy appropriate monetary policy settings, which once again, isn’t anything new.
• Note that it has been announced that Kuroda will make an address at 15:30 Japan time, with his term atop the central bank ending tomorrow.