Futures Hover Above Overnight Base

JGB futures hover above their overnight session base, with U.S. TY futures operating a little above their late Monday low. There hasn’t been much in the way of major domestic news flow to digest, outside of that flagged ahead of the Tokyo open (also note that various data vendors highlighted that 10-Year cash JGBs didn’t trade on Monday, the first such instance in around a month). That leaves Tokyo participants to assess the overnight swings in wider core global markets and macro news flow observed since Monday’s Tokyo close.

• JGB futures deal -39 at typing, while cash JGBS run 0.5-2.5bp cheaper across the curve, generally bear steepening (the presence of impending 40-Year JGB supply will be weighing on the long end), although 7s break the conventional pattern, providing the weakest point on the curve owing to the move in futures.
• Pay side swap flows will also be adding pressure to JGBs, with swap spreads wider across the curve.
• Note that BoJ Governor will be making an appearance in parliament from 10:42 Tokyo/02:42 London, in addition to the previously flagged appearance.