Futures Holding In Negative Territory At the Lunch Break, 20Y Supply Due

At the Tokyo lunch break, JGB futures are holding in negative territory, -9 compared to settlement levels, after trading in a narrow range in the morning session.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined trade balance, core machine orders and international investment flow data.
• US tsys are holding cheaper through today's Asian session, with the benchmarks 2-3bps cheaper across the curve. The belly is underperforming.
• Cash JGBs are mixed, with yields 0.7bp higher to 0.5bp lower. The benchmark 10-year yield is 0.4bp higher at 0.634%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• The 20-year JGB is outperforming on the curve, showing no concession, ahead of today’s 20-year supply.
• The swaps curve has bear flattened, with rates 0.6bp to 1.2bp higher. Swap spreads are generally wider across the curve.