Futures Cheapen In Afternoon Trade, 30-Year Supply Tomorrow

JGB futures are weaker, -5 compared to the settlement levels, after trading in a relatively narrow range in the Tokyo session.

• Apart from the previously mentioned Jibun Bank Services and Composite PMI data, which failed to have an impact on the market as anticipated, there have been few notable domestic drivers to highlight.
• The cash US tsys curve bull steepens in Asia-Pac trade with yields 0.1-2.9bp lower across the major benchmarks. Tsys looked through a weaker than forecast Caixin Services PMI print and narrow ranges persisted for the majority of the session.
• Cash JGBs are richer across benchmarks but the richening has lessened in Tokyo afternoon trade in line with this morning’s BoJ Rinban that showed higher and positive spreads, and higher offer cover ratios for the shorter end operations. The 10-25 operations saw a negative average spread but a higher cover ratio.
• The benchmark 10-year yield is 1.7bp lower at 0.369%, after yesterday’s 10-year auction showed solid demand with the low-price exceeding forecasts, the cover ratio reaching a four-month high of 4.024x, and the tail narrowing to its lowest level in four months.
• The swaps curve has twist flattened with swap spreads wider.
• Tomorrow the local calendar sees International Investment Flows (Jun 30) along with 30-year supply.