Futures Cheaper, Two-Way Trade In Tokyo Session

The two-way trade in JGB futures has continued in the Tokyo afternoon session with JBU3 dealing in the middle of the day’s range at 147.60, -24 compared to settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined June national CPI which printed broadly in line with expectations.
• Accordingly, local participants appear to have been content to be on headlines and US tsys watch. Us tsys are holding richer in the Asian session today, however, they have ticked away from session highs. Ranges remain narrow with few follow-on moves. Cash tsys sit 1-1.5bps richer across the major benchmarks, light bull steepening is apparent. There is a dearth of US economic data over the next two sessions, awaiting the latest FOMC policy announcement next Wednesday, July 26.
• Cash JGBs are cheaper across the curve out to the 20-year zone, with the benchmark 10-year the underperformer. The 10-year yield is 1.9bp higher at 0.486%, below BoJ's YCC limit of 0.50%.
• Swaps have shifted weaker in the afternoon session with rates 0.2bp to 0.8bp higher. Swap spreads narrower out to the 20-year and wider beyond.
• On Monday the local calendar sees Jibun Bank PMI and Department Store data. The focus next week will be the BoJ policy decision on Friday.