Futures Holding Weaker At Lunch, Narrow Range

At the Tokyo lunch break, JGB futures are holding the morning’s early losses, -27 compared to settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined annual PPI miss and weekly international investment flow data that showed offshore investors were large sellers of Japanese bonds.
• US tsys are sitting at session lows in Asia-Pac trade, with no obvious headline driver. This leaves cash tsys ~1bp cheaper across the major benchmarks.
• The cash JGB curve (beyond the 1-year) has bear steepened with yields flat to 3.9bp higher. The benchmark 10-year yield is 0.1bp higher at 0.585%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• The swaps curve has also bear steepened. Swap spreads are wider apart from the 30- and 40-year.