Futures Cheaper But At Session Highs At Lunch, BoJ Rinban Results Due

At the Tokyo lunch break, JGB futures are weaker but at session highs, -13 compared to the settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Trade Balance data.
• Cash US tsys are dealing ~1bp richer in today’s Asia-Pac session after yesterday’s post-Powell cheapening.
• It's not solely the anticipation of additional interest rate hikes by the BoJ this year that is impacting JGBs; they are also feeling the effects of a renewed correlation with increasing US yields. Since the start of the year, the trajectories of these two bond markets have been closely aligned, reminiscent of the pattern observed in the fourth quarter of last year, when 10-year JGB yields nearly reached 1%.
• Cash JGBs are mostly cheaper across the curve, with yields flat (4-year) to 1.8bps (20-year) higher. The benchmark 10-year yield is 0.2bp higher at 0.873% versus the YTD high of 0.884%, set yesterday.
• Results of today’s BoJ Rinban operations covering 1- to 25-year JGBs are due.
• The swaps curve has twist-steepened, with rates 3bps lower to 1bp higher. Swap spreads are tighter.