Futures Holding Gains At Tokyo Lunch Break, Rinban Operations May Provide Slight Support

At the Tokyo lunch break, JGB futures are holding firmer, +12 compared to the settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined trade balance data that surprisingly printed a trade surplus.
• Cash JGBs are richer across the curve apart from the futures-linked 7-year zone, which is 0.5bp cheaper. The benchmark 10-year yield is 0.4bp lower at 0.462%, below BoJ's YCC limit of 0.50%.
• During this morning's BoJ Rinban operations, lower and negative spreads were observed. The cover ratios were lower for the 1-3-year (1.90x) and 5-10-year (1.88x) buckets compared to the previous outing. However, they were higher for the 3-5-year (2.29x) and 10-25-year (1.81x) buckets. Overall, this might provide some mild support for the market during the early rounds of the Tokyo afternoon session.
• The swaps curve has bull flattened with swap spreads tighter out to the 10-year and wider beyond.
• Later today the local calendar sees June data for Tokyo Condos For Sale and Machine Tool Orders (Final). Tomorrow sees the release of National CPI data.