Futures Holding Overnight Gains In Tokyo Morning Trade

In Tokyo morning trade, JGB futures are holding overnight gains, +27 compared to settlement levels.

• Aggregate weekly investment flows were more modest in the final week of September. Offshore purchases of local bonds turned positive but were a very modest ¥25.8bn, a slight offset on the prior week's outflow. In terms of Japan's domestic outflows, flows to offshore bond markets were positive, but at a more modest ¥297.1bn.
• Cash JGBs are mixed, with yields 1.1bps higher (1-year) to 1.6bp lower (7-year). The benchmark 10-year yield is 0.3bp lower at 0.795%, above BOJ's YCC soft limit of 0.50% but below its hard limit of 1.0%. It is also lower than the cycle high of 0.799%, set yesterday.
• The 30-year yield is 0.7bp lower at 1.813% ahead of today's supply. The outright yield and the 2/30 yield curve currently sit at their highest points since 2014. Market participants will be keen to see if this attracts investors to today's auction.
• The swaps curve has bull flattened, with rates 0.4bp to 1.1bps lower. Swap spreads are tighter across maturities.