Futures Extend Overnight Gains, 10Y Supply Due

In Tokyo morning trade, JGB futures have extended overnight gains, +35 compared to settlement levels.

• In the week ending Oct 27, offshore outflows from Japan's local bonds were the main theme in terms of the weekly investment flow update. We had a further -¥1672.7bn in outflows. This was the largest since mid-September. Since that period, we have seen nearly -¥4300bn in outflows from this segment. Last week's outflow of course came ahead of this week's BoJ meeting. In terms of Japan's outbound flows, we had resumed buying of foreign bonds, but it was a moderate ¥238.5bn. This offset last week's selling.
• The monetary base grew 9.0% y/y in October versus 5.6% previously.
• Cash US tsys are dealing 2-3bp richer across benchmarks so far in the Asia-Pac session, after yesterday's strong rally.
• The cash JGB curve has bull-flattened, with yields 0.4bp to 3.5bps lower. The benchmark 10-year yield is 3.1bps lower at 0.93% versus yesterday’s cycle high of 0.974% and the BOJ's 1% YCC reference rate. 10-year supply is due later today.
• The swaps curve has also bull-flattened, with swap spreads wider out to the 7-year and tighter beyond.