Futures Holding Stronger At Tokyo Lunch Break, 5-Year Supply Due

At the Tokyo lunch break, JGB futures are holding stronger than the overnight close, +18bp compared to settlement levels, after trading in a relatively narrow range.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined M2 and M2 money stock data, which is unlikely to have moved the market. June preliminary machine tool orders are out later today.
• Cash tsys are dealing little changed from yesterday's closing levels in a muted start to Tuesday's trade. There has been little meaningful macro news flow thus far.
• Cash JGBs are dealing mixed at the end of Tokyo morning session with the belly of the curve outperforming. The benchmark 10-year yield is 0.2bp lower at 0.46%, below the BoJ's YCC limit of 0.50%. The 30-40-year zone is underperforming with yields 0.9-1.2bp cheaper.
• The 5-year benchmark is dealing 0.1bp lower at 0.121%, showing little concession, ahead of today’s supply. It is worth noting that a slight richening of the belly in the 2/5/10-year butterfly since the June auction may impact investor interest at today’s auction. The 5s currently sit just above the cycle's richest levels.
• Swap spreads are tighter across the curve apart from the 7-year.