Futures Edge Into Positive Territory, 5Y Supply Due

In Tokyo morning trade, JGB futures have edged into positive territory, +5 compared to settlement levels.

• Today, the local calendar will see the Consumer Confidence Index and Machine Tool Orders data alongside 5-year supply.
• (Bloomberg) Trading of Japanese government bonds has increased since the central bank moved away from controlling yields last month, and at least one indicator in the market suggests that liquidity is returning. Among the signs of progress, the average bid-ask spread to trade the country’s debt has tightened to the narrowest in at least six months, a sign there are plenty of traders wanting to buy or sell the notes. (See link)
• Cash JGBs are slightly mixed, apart from the 10-year. The benchmark 10-year yield is 2bps lower at 0.783% after setting a fresh YTD high of 0.802% yesterday.
• The 5-year yield is 0.1bp lower at 0.385% ahead of today’s supply.
• The swaps curve has twist-steepened, pivoting at the 20s, with rates 2bps lower to 2bps higher. Swap spreads are tighter out to the 7-year and wider beyond.