Futures Holding Gains In Afternoon Trade, Rinban Suggest Slight Support For Market

JGB futures are holding early session gains in early afternoon trade, + 29 compared to settlement levels.

• The local docket has been light today, with M2 & M3 money stocks as the only releases. Machine Tool Orders are due later.
• Accordingly, the extension of overnight gains in the Tokyo morning session appears linked to a richening in US tsys in Asia-Pac trade. US tsys are dealing flat to 2bp richer, although off bests, with the curve flatter.
• Cash JGBs have bull flattened, with the benchmark 10-year yield 1.8bp lower at 0.592%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• This morning’s BoJ Rinban operations saw flat to positive spreads and slightly higher cover ratios (1-3-year: 1.67x, 3-5-year: 2.21x, 5-10-year: 2.45x and 10-25-year: 4.10x), which may generate some slight pressure in early rounds of the Tokyo afternoon session.
• Swap rates are lower across the curve. Swap spreads are wider across the curve.