Futures Holding In Negative Territory After Initially Paring Overnight Losses

In Tokyo morning trade, JGB futures have maintained the overnight loss, -8 compared to settlement levels, after an initial paring at the open failed to hold.

• Japan’s trade balance printed weaker than expected, with exports falling for the second consecutive month amid a global slowdown. This is a worrying development for an economy, which has been increasingly dependent on overseas markets. The value of exports decreased 0.8% in August from a year earlier, led by slumps in mineral fuel, and chip-making machinery. Economists had forecast a 2.1% decline. Japan’s exports had seen its first drop in more than two years in the previous month but also slipped on a month-on-month basis. (See link)
• The local calendar will also see August Tokyo Condominiums for Sale data later today.
• The cash JGB curve has bear-steepened, with yields 0.3bp to 1.5bp higher. The benchmark 10-year yield is 0.6bp higher at 0.724%, a new post-YCC tweak high.
• Today the BoJ will conduct Rinban operations covering 1- to 25-year JGBs.
• Swap rates are flat to 0.4bp higher across the curve, with swap spreads tighter.