Futures Holding In Positive Territory But Off Highs After Jobs Data

In Tokyo morning trade, JGB futures are holding in positive but below the overnight closing level, +11 compared to settlement levels, after this morning’s data drop.

• The December jobs data was somewhat mixed. The jobless rate ticked down to 2.4% versus an expected unchanged 2.5%. The job-to-applicant ratio ticked down though to 1.27 versus an expected unchanged 1.28.
• The dip in the unemployment rate is a little at odds with the fall in the job-to-applicant ratio. However, the dip in the unemployment rate was driven by a fall in the participation rate, down to 62.8% from 63.1% in November.
• In terms of job offers, there were up 0.2% m/m, while new job offers rose 3.0% m/m. This comes after falls in Nov in m/m terms. The y/y trend for both series remains negative though (-3.1% for job offers).
• Cash JGBs are dealing slightly mixed, with yield movement bounded by +/- 0.5bp. The benchmark 10-year yield is 0.4bp lower at 0.719% versus the Nov-Dec rally low of 0.555%.
• The 2-year is unchanged ahead of today’s supply. Last month's 2-year auction demonstrated mixed demand metrics, with the cover ratio increasing to 3.045x from 2.911x previously but the tail lengthening. Today’s auction however comes with the outright yield slightly below late-December levels, with 2/5 and 2/10 curves 5-10bps steeper.
• Swaps are slightly cheaper, with swap spreads little changed.