Futures Cheaper & At Lows Despite Increased Demand Seen At 30Y Auction

JGB futures are weaker and at Tokyo session lows, -10 compared to settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Weekly International Investment Flow data.
• Regional and cooperative shinkin banks will find policy normalisation far more challenging than their larger peers due to the mismatch of interest paid on deposits compared to that received via their typically longer-dated fixed-income investments, raising concern among Bank of Japan officials, MNI understands. (See MNI Policy MainWire).
• Cash JGBs are slightly richer but movements are slight across benchmarks out to the 10-year. The benchmark 10-year yield is 0.3bp lower at 0.750% versus the YTD high of 0.801%.
• The 30-year yield is 1.4bp lower at 1.838% after today’s supply. 30-year supply saw mixed demand metrics. The low price failed to meet dealer expectations, but the cover ratio increased to 3.467x from 2.934x in March. It was also noteworthy that the auction tail narrowed.
• Like Tuesday's 10-year supply, albeit with less subtlety, today's auction sets a positive tone for a market that had been under pressure since mid-December due to anticipated policy tightening by the BoJ.
• Swaps are slightly mixed, with swap spreads wider across maturities.
• Tomorrow, the local calendar sees Household Spending data and Leading & Coincident Indices.