Futures Downtick, Debt Ceiling Deal, Rinban Operations Today

JGB futures unwind the uptick seen in overnight trading ahead of the weekend to be 148.51, -5 compared to settlement levels as US tsy futures soften slightly in Asia-Pac trade, reacting to the news of a bipartisan debt ceiling agreement had been reached on Saturday. However, the true test remains in garnering support from lawmakers across the political spectrum.

• Cash tsys are closed today for the Memorial Day holiday.
• In a Bloomberg article, the possibility of a dissolution of the diet and general election in June-July will probably remain on the market’s radar because of improvement in approval ratings of PM Kishida’s administration, according to Barclays note dated Sunday. (link)
• Cash JGBs are trading mixed in early Tokyo trade with yields ranging from +0.6bp (1-year) to -0.4bp (5-year). The benchmark 10-year yield is 0.1bp higher at 0.422%, below the BoJ's YCC limit of 0.50%. The benchmark 2-year yield, ahead of tomorrow's 2-year supply, is trading unchanged at -0.063%, showing no sign of concession on the curve.
• The swap curve has twist steepened in early Tokyo trade with rates -0.1bp to +1bp. Swap spreads are wider across the curve.
• On the local data front, we have later today final March readings for the coincident and leading indices, with neither release likely to move sentiment.
• BoJ Rinban operations covering 3-25-year+ JGBs are slated today ahead of 2-year supply tomorrow.