Futures Extend Overnight Gains In Tokyo Morning Trade, Local Data Drop Mixed

In Tokyo morning trade, JGB futures extended overnight gains, +24 compared to settlement levels, after today’s mixed domestic data drop, with the market seemingly focusing on the weaker-than-expected retail sales rather than robust IP data.

• The bid has also benefited from spillover from yesterday's strong NY session for US tsys. Cash US tsys are little changed so far in the Asia-Pac session.
• Offshore investors stepped up their purchases of local Japanese bonds. The ¥864.1bn in net inflows was the strongest weekly pace since the first half of October. Local investors were net sellers of both offshore bonds.
• Japan's industrial production rose 1.0% in October compared with last month. The electronic parts and device industry made the largest contribution to the increase.
• Retail sales rose 4.2% y/y in October, following the 6.2% y/y growth reported last month, marking the 20th monthly rise.
• Later on today, housing starts and consumer confidence are due. Also, note we hear from the BOJ's Nakamura at 10:30 am local time (01:30 GMT).
• The cash JGB curve bull-flattens beyond the 1-year, with yields 0.7bp to 4.5bps lower. The benchmark 10-year yield is 2.0bps lower at 0.654%.
• The 2-year is underperforming on the curve ahead of today’s supply.
• The swaps curve has also bull-flattened, with swap spreads narrower out to the 10-year and wider beyond.