Futures Eyeing August 6 Lows, Reasonable Demand At 10yr Auction

JGB futures sit at fresh lows back to early August. JBU4 last at 144.37, -.23 compared with settlement levels. This puts August 6 lows at 144.30 within sight.

• Whilst some negative spill over from core futures moves has likely been at play, JGBs have underperformed the more resilient tone seen in US Tsy futures. US Tsy yields re-opened higher, but have pared gains as the session progressed.
• Risk off has bene evident in FX, parts of equity and metals commodity space, but hasn't seen much follow through to JGBs.
• The 10yr auction saw solid enough demand as well, with a bid to cover ratio of 3.17, versus 2.975 at the auction in early August. The tail was also down to 0.09 versus 0.50 at the prior auction.
• In the cash cash JGB space, we are up more than 1bps across most of the benchmarks, except the longer end. The 10yr was last around 0.93%. The 10yr swap rate was close to 0.92%.
• Looking ahead we have the service and composite PMI final reads for August tomorrow. On the supply front, we have the 30yr debt auction on Thursday.