Futures higher at Lunch But Mid-Range, Light Local Calendar

At the Tokyo lunch break, JGB futures are slightly stronger, +3 compared to the settlement levels, and sit in the middle of today’s range.

• According to MNI’s technicals team, JGB futures remain in a short-term bull cycle - for now. This puts prices clear of the early July highs and goes part way to reversing the sell-off across June. Resistance remains intact at 144.88, the May 8 high, which will be a focus on an extension of the current bounce. Support sits below at 142.23, the early Jul lows. A break of this level would be bearish.
• Today, the local calendar will see Tokyo Condominiums for Sale data alongside an Enhanced Liquidity Auction covering OTR 1-5-year JGBs.
• Cash JGBs are flat to 3bps cheaper (1 year). The benchmark 10-year yield is 0.6bp lower at 1.050% versus the cycle high of 1.108%.
• The swaps curve has twist-steepened, pivoting at the 40-year, with rates 1.5bps lower to 1.5bp higher. Swap spreads are tighter.