Futures Extend Overnight Losses Seen Ahead Of The Weekend

In the Tokyo morning session, JGB futures have slightly extended overnight weakness seen ahead of the weekend, -8 compared to settlement levels.

• A thin local docket on Monday leaves participants on headline and US tsys watch.
• US tsys are dealing little changed across the major benchmarks in a muted start to this week's trade. Narrow ranges have persisted in early dealing and little macro news flow has crossed.
• Japan's Financial Services Agency told regional banks in mid-July that they should be ready to respond flexibly to rapid interest-rate fluctuations. It is a sign of how anxious policymakers and investors around the globe are about financial land mines that could be triggered by rising interest rates. (See link)
• Cash JGBs are little changed beyond the 1-year zone, which sees its yield 1bp higher. Beyond the 1-year, JGB yields are 0.1-0.3bp higher. The benchmark 10-year yield is unchanged at 0.635%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• The swaps curve has bear steepened, with rates 0.1-1.3bp higher. Swap spreads are wider.