Futures Hold Bulk Of Cheapening Move, 10-Year Supply In View

JGB futures held on to the bulk of their early Tokyo cheapening to hit the lunch bell -3, with the contract sticking within the range observed in overnight trade. To recap, Tokyo’s seemingly greater focus on the potential ramifications of higher oil prices, as opposed to Monday’s soft U.S. manufacturing data, as well as some cheapening in U.S. Tsys and the presence of this afternoon’s 10-Year JGB auction were the likely drivers of the unwind of the overnight bid in futures. Meanwhile, the majority of the major cash JGB benchmarks are now in cheaper territory after they also unwound the early richening related to Monday’s moves in wider core global FI markets.

• The swap curve has twist steepened, although moves across that curve see the major benchmarks sitting within 1bp of Friday’s closes.