Futures Holding In Positive Territory At The Tokyo Lunch Break

At the Tokyo lunch break, JGB futures are holding stronger, +13 compared to settlement levels, after trading in a narrow range in the Tokyo session.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Q2 capex and company profits data, which were mixed relative to expectations, and an unchanged print for the Jibun Bank Manufacturing PMI.
• Accordingly, local participants have likely been eyeing US tsys ahead of US Non-Farm Payrolls data later today. US tsys have firmed from session lows, the move came alongside pressure on the USD after the PBOC cut the forex reserve requirement ratio by 2ppts. This leaves US tsys 1bp richer to flat across the major benchmarks. A light bull steepening is apparent. TYZ3 deals at 110-31, -0-02, a 0-04+ range has been observed.
• The cash JGB curve twist-flattened, pivoting at the 2s, with yields 0.2bp higher to 0.9bp lower. The benchmark 10-year yield is 0.5bp lower at 0.646%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• Swaps rates are mostly lower, part from the 2-year and 30-year, with pricing 0.1bp to 0.3bp lower. Swap spreads are wider.