Futures Extend Tokyo Session Gains At The Lunch Break

At the Tokyo lunch break, JGB futures are stronger, +15 compared to the settlement levels, after reversing the overnight downtick.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined unemployment rate that undershot expectations.
• Cash JGBs are mixed across the curve with yields +1.5bp (40-year) to -1.2bp (10-year). The benchmark 10-year yield is at 0.60%, above the BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%. The results of the MoF’s sale of Y2.7tn of 10-year JGBs are due.
• After yesterday’s unscheduled Y300bn purchase of 5- to 10-year JGBs at market, the BoJ only announced today intention to buy an unlimited amount of 5- to 10-Year JGBs at a fixed rate of 1.0%.
• Swap rates are trading mixed with swap spreads tighter out to the 5-year and wider beyond.