Futures Holding Cheaper At Session Lows, Curve Bear Steepens, New 10YY High

In Tokyo morning trade, JGB futures are holding overnight losses, -38 compared to settlement levels.

• ICYMI, JGB futures breached 145.00 overnight as BBG sources reported that “the BOJ is likely to discuss raising its inflation projection for fiscal year 2023 and 2024 at its policy meeting later this month, extending the period in which it sees prices hitting or exceeding its 2% goal.”
• According to MNI’s technicals team, JBZ3 sold off sharply Tuesday, putting the contract further through support at 145.49, the Aug 17 low. A continuation lower and the clear break of this area would confirm a resumption of the medium-term downtrend and pave the way for weakness towards 144.15, the Jan 13 low and major support. On the upside, clearance of 146.41, the Sep 4 high would instead highlight a base and a possible short-term reversal.
• Today, the local calendar is light, with Tokyo Condominiums for Sale due later as the only release.
• The cash JGB curve has bear-steepened, with yields 2.2bps to 5.2bps higher (20-year). The benchmark 10-year yield is 3.6bps higher at 0.817%, 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 0.82% set today.
• Swap rate movements are mixed and bounded by 0.3bp lower (30-year) and 1.3bps higher (3-7-year zone). Swap spreads are generally tighter across maturities.