Futures Extend Overnight Downtick In Early Tokyo Trade, 30-Year Supply Due

JGB futures extend the overnight downtick to be at 148.66, -7 compared to settlement levels, as local participants digest the cheapening in longer-dated US tsys in NY trade. The 10-year US tsy yield finished 8bp higher at 3.93% after reaching a fresh 3-month high of 3.95%. Cash US tsys have opened Asia-Pac trade little changed.

• Investment flow data for the week ending June 30 showed offshore investors purchased Japan bonds last week, +Y484.7bn, but this only partially reversed outflows from the prior two weeks. The data also revealed a decent pick up in Japanese buying of offshore bonds, +Y1252bn. This marked the 8^th straight week of outflows into offshore bonds.
• Cash JGBs are dealing mixed early in the Tokyo session with yield movements ranging from -0.4bp to +0.4bp. The benchmark 10-year yield is 0.2bp higher at 0.392%, below the BoJ's YCC limit of 0.50%.
• The 30-year benchmark is outperforming on the curve (0.4bp richer) ahead of today’s sale of Y900mn 30-year bonds.
• Bloomberg reports that Barclays chief yen rates strategist Shinji Ebihara believes there will probably continue to be a downward bias in yields before the BoJ’s policy meeting this month due to its dovish bias.
• Swap rates are 0.4-0.8bp higher across the curve. Swap spreads are wider.