Futures Have Pushed Into Positive Territory At Lunch

At the Tokyo lunch break, JGB futures have pushed into positive territory, +4 compared to the settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined monetary base data.
• According to MNI’s technicals team, JGB futures pushed through support at 145.49, the Aug 17 low, on Thursday. The continuation lower and the clear break of this area confirmed a resumption of the medium-term downtrend and has paves the way for weakness towards 144.15, the Jan 13 low and a major support. On the upside, clearance of 146.41, the Sep 4 high would instead highlight a base and a possible short-term reversal.
• Cash JGBs are slightly mixed across the curve. The benchmark 10-year yield is 0.5bp lower at 0.772%, above BOJ's YCC soft limit of 0.50% but below its hard limit of 1.0%. It is also just shy of the cycle high of 0.785%, set earlier today. The MoF plans to sell Y2.7tn of 10-year JGBs.
• The swap curve has bear-flattened, with rates 0.2bp to 1.8bps lower. Swap spreads are generally tighter.