Futures Holding Near Session Highs After 10Y Supply Results

During the Tokyo afternoon session, JGB futures are trading close to their session highs, +17 compared to the settlement levels. JGB futures shifted into positive territory around lunchtime in Tokyo and continued to gain strength following the conclusion of the 10-year auction.

• The 10-year supply saw mixed demand metrics. The low price beat wider expectations and the tail shortened. However, the cover ratio declined to 3.934x from 4.019x at the September auction.
• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined monetary base data.
• Cash JGBs are mixed across benchmarks, with the belly outperforming. The benchmark 10-year yield is 1.6bps lower at 0.761% versus the cycle high of 0.785% set earlier today.
• The swap curve has bull-flattened to the 10-year, with rates 0.2bp to 2.9bps lower. Swaps rates are 1.3-1.5bp lower beyond. Swap spreads are generally tighter.
• Tomorrow the local calendar sees Jibun Bank PMIs (Final), along with BoJ Rinban operations covering 1- to 25-year JGBs.