Futures Higher Overnight, 5Y Supply The Focus

In post-Tokyo trade, JGB futures are stronger, closing +12 compared to settlement levels, after a heavy Monday session instigated by hawkish remarks from BoJ Governor Ueda.

• US tsys finished flat to 4bps richer across the major benchmarks, with the curve steeper. US tsys observed narrow ranges in the NY session. NY Fed's 1-Year Inflation expectations ticked marginally higher in August, however, there was a muted reaction to the release. The latest 3-year supply tailed, the first tail since Feb 7.
• According to MNI’s technicals team, a hawkish read of comments from BoJ’s Ueda set JGB futures off to a poor start Monday, prompting a pullback low of 145.50. This puts prices on course to test new contract lows at 145.49 and open vol band support at 145.46 and 144.56 below. The outlook holds bearish for now, with a recovery back above 145.85 needed to steady the outlook.
• A top-ranked fund that keeps a fifth of its assets in shares of Japanese lenders is ready to increase that position on the possibility the central bank is preparing to end its ultra-easy monetary policy. (See link)
• Today the local calendar is empty, with the market’s attention focused on the sale of Y2.5tn 5-year JGBs.