Futures Heavy, Lacklustre BoJ Rinban Operations

JGB futures push to session lows in the Tokyo afternoon session, -24 versus settlement levels, after the morning’s BoJ Rinban operations covering 1-10-year and 25-Year+ JGBs showed flat to positive spreads and slightly higher cover ratios.

• US tsys push away from session bests assisted the cheapening in JGBs in the afternoon session.
• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined weaker-than-expected trade data which only appeared to provide a brief pop higher in JGB futures at the start of the Tokyo session.
• Cash JGBs are mixed with the 1-year and 7-year zones 1.4bp cheaper but little changed in between. The 10-40-year zones are flat to 0.9bp cheaper. The benchmark 10-year yield is 0.9bp higher at 0.379% with the 20-year yield flat at 0.976%, after yesterday's auction-induced decline of 3.7bp.
• The swap curve twist steepens with rates 0.1bp lower to 1.1bp higher. Swap spreads are wider except for the 1-year and 7-year zones.
• Tomorrow sees the release of the National CPI release for April along with the weekly auction of 3-month bills.